Working From Home Expenses for UK Freelancers
If you run your freelance business from your kitchen table or spare room, part of your household costs can reduce your tax bill. HMRC gives sole traders two ways to claim: a simple flat rate based on hours, or a share of your actual bills. This guide explains both, how to split costs fairly and what records to keep. It is general information, not tax advice, and the rules and rates can change each tax year, so check GOV.UK or speak to an accountant before you claim.
Key takeaways
- Sole traders who work from home can claim either HMRC's flat rate (simplified expenses) or a fair share of actual household costs.
- The flat rate only applies if you work at least 25 hours a month from home, and it is based on hours, not on what you spend.
- Phone and internet are not covered by the flat rate: claim the business share of those separately under either method.
- With actual costs, you need a reasonable, documented method for splitting bills between business and personal use.
- Keep a simple log of hours and the calculations behind your claim in case HMRC asks.
Many UK freelancers never claim anything for working from home because it seems fiddly or risky. Others claim too much, for example a large slice of the mortgage or the full broadband bill. Neither is ideal. The good news is that the rules are not complicated once you see how the two methods work, and for most people the decision takes about ten minutes a year.
This guide is for sole traders and partners in a partnership who file a Self Assessment return. If you run a limited company, the rules are different, because the company is a separate legal person, so speak to your accountant about what the company can pay or reimburse.
What counts as working from home
HMRC's allowable expenses rules say a cost must be incurred wholly and exclusively for the business. Your home is obviously not used only for business, so you cannot claim the whole cost of running it. What you can claim is the part of certain costs that relates to your business use.
That usually means you regularly do business work at home: writing proposals, designing, coding, taking client calls, doing your books or managing stock. An occasional email on the sofa does not make your home a business base. If you have a separate office or studio elsewhere and only work at home now and then, your claim will be small or nothing.
Typical household costs that may have a business share include:
- Heating, electricity and gas
- Water, if your business uses a meaningful amount
- Council tax
- Rent, or mortgage interest (not the capital part of repayments)
- Buildings and contents insurance
- Cleaning and minor repairs to the room you use
- Phone and broadband, claimed separately for their business share
Common mistake
Claiming mortgage repayments in full. The capital part of a mortgage repayment is not a business expense, and only a fair share of the interest may be relevant. If you own your home and are thinking of claiming a share of mortgage interest or using a room exclusively for business, ask an accountant about the possible effect on Capital Gains Tax when you sell.
Method 1: HMRC's flat rate for working from home
Simplified expenses let you claim a fixed monthly amount based on the number of hours you work from home. You do not need to work out what share of your bills relates to the business. This option is available to sole traders and to partnerships with no companies as partners, and it is optional.
| Business hours worked at home in the month | Flat rate for that month |
|---|---|
| 25 to 50 hours | £10 |
| 51 to 100 hours | £18 |
| 101 hours or more | £26 |
If you work fewer than 25 hours from home in a month, you cannot use the flat rate for that month. You add up each month's figure to get your total for the tax year, which runs from 6 April to 5 April.
The flat rate covers household running costs such as heating and electricity. It does not cover your phone or internet. You can claim the business share of those on top, which is easy to forget.
Who the flat rate suits
The flat rate tends to suit freelancers who want minimal admin, who live in smaller homes where a share of bills would be modest anyway, or who work from home only part of the week. It also gives you certainty: you know exactly what you are claiming and why.
Method 2: claiming a share of actual costs
The alternative is to work out the business proportion of your real household bills. This can give a larger claim, especially if you spend most of your working week at home in a dedicated room, but it takes more effort and needs a method you can explain.
HMRC expects the split to be reasonable. A common approach combines two factors:
- Space. Work out what share of your home the work area represents, for example by counting rooms of similar size or by floor area.
- Time. Work out how much of the time that space is used for business compared with personal use.
- Apply the result to each relevant bill. Multiply each eligible annual cost by the business share. Some costs, such as electricity for equipment, may justify a different basis from heating.
- Write it down. Keep a short note of the method, the figures and any assumptions, and reuse it each year unless your setup changes.
Example
Imagine a freelance copywriter who rents a flat with four rooms of similar size, excluding the kitchen and bathroom. She uses one room as her office during the working day and as a guest room in the evenings and at weekends. She estimates the room is used for business about a third of the time. One room out of four is a quarter of the space; a third of that time gives a business share of roughly one twelfth. If her heating, electricity and council tax together came to, say, £2,400 for the year (a made-up figure), her claim for those would be about £200. She would add the business share of her broadband and phone separately. These numbers are invented to show the method only.
Rent is often the largest cost for renters, and a fair share of it can be included in the same way. Not every bill is sensibly split by space. If your work equipment uses a lot of electricity, for example a powerful computer or a kiln, a basis that reflects actual usage may be more accurate. The key test is whether a reasonable person could follow your logic.
Flat rate or actual costs: how to choose
You can compare both methods in a few minutes with last year's bills. Neither is automatically better, and the right answer depends on your home, your hours and how much admin you are willing to do.
Flat rate strengths
- Very little paperwork: you only track hours
- No need to split bills or justify proportions
- Easy to apply consistently every month
- Clear rules, so less room for disagreement
Flat rate limits
- Often smaller than an actual-costs claim for full-time home workers
- No relief for months under 25 hours
- Ignores how expensive your home is to run
- Does not include phone or internet
A quick way to decide:
- If you work from home most days in a dedicated room and your bills are significant, calculate actual costs. The extra effort may be worth it.
- If you work from home a few days a week, or share the space heavily with family life, the flat rate may be close to what an actual-costs calculation would give you, with much less work.
- If your hours vary month to month, remember the flat rate band changes with them, so keep an hours log either way.
Pro tip
Run both calculations once, at the end of your first year, and keep the workings. If the difference is small, choose the flat rate and save yourself the effort in future years. Revisit the decision if you move home or your working pattern changes.
Phone, broadband and equipment
Phone and internet are treated separately from household running costs. Whichever method you use for the home, you claim the business share of these on their own.
Mobile phone
If you have a phone used only for business, the contract can usually be claimed in full. If you use one phone for both, claim a reasonable business share. Looking at a few itemized bills to see the balance of business and personal calls and data is a sensible starting point.
Broadband and landline
Home broadband is almost always mixed use. Estimate the business share based on how much you use it for work compared with the rest of the household. Keep the reasoning brief and realistic: claiming the full cost of a family broadband package is hard to justify.
Furniture and equipment
A desk, office chair, monitor or laptop bought for the business is not a household running cost. Under the cash basis, which is the default for most sole traders, most equipment purchases are claimed as expenses in the year you pay for them. If you use traditional accounting, they are usually handled through capital allowances. If an item is also used personally, claim only the business share.
Records to keep for your claim
HMRC can ask how you arrived at any figure on your return. For working from home, the evidence is simple to keep if you build it into your routine.
- Hours log. A calendar, timesheet or spreadsheet showing roughly how many hours you worked at home each month. This matters for the flat rate bands and supports an actual-costs claim too.
- Bills. For actual costs, keep the annual totals for each household bill you include, with the underlying statements.
- Your method. A short written note of how you split costs, including rooms, time and any assumptions.
- Phone and internet. A few sample bills or a note explaining your business percentage.
Store these alongside your other business records. If you are within Making Tax Digital for Income Tax, check how your software handles home working expenses so your quarterly updates and final declaration are consistent. For a full record-keeping system, see our guide to sole trader bookkeeping.
Common mistake
Mixing the two methods for the same costs. If you use the flat rate for household running costs, you cannot also claim a share of the actual heating or electricity bills for the same period. Phone and internet are the exception, because they sit outside the flat rate.
Your working from home checklist
- Start a monthly log of the business hours you work at home
- Gather last year's household bills to compare both methods
- Decide on a reasonable way to split space and time if you use actual costs
- Write a one-paragraph note explaining your method
- Work out the business share of your phone and broadband separately
- Record equipment purchases as business expenses or capital items
- Check current rates on GOV.UK before you file each year
Frequently asked questions
Can I claim working from home expenses if I rent?
Yes. Renters can use the flat rate or claim a reasonable share of actual costs, which can include a share of rent. Check your tenancy agreement too, since some landlords restrict business use of a property.
Do I need a dedicated room to claim?
No. You can claim if you work at a desk in a shared room, as long as you regularly do business work at home. A dedicated room usually supports a larger actual-costs claim, but it is not required for either method.
Can I switch between the flat rate and actual costs?
For working from home, you can generally choose the method that suits you for each tax year, but keep your approach consistent within a year and keep records for both the hours and the bills. The rule that you must keep using a flat rate once chosen applies to vehicles, not to working from home. If you are unsure, ask an accountant.
Is this the same as the employee working from home allowance?
No. Employees have separate rules for claiming tax relief on working from home costs. This guide covers self-employed people who include expenses in their Self Assessment business accounts.
Related reading
The bottom line
If you work from home as a sole trader, you are probably entitled to some relief. The flat rate is quick and certain; actual costs can be worth more if your home is your main workplace. Either way, claim phone and internet separately, keep an hours log and write down your method so you can explain it.
This is general information rather than tax advice. Rates, thresholds and HMRC guidance can change every tax year, so check the latest position on GOV.UK or with an accountant before you file your return.
