Working from Home? Here’s How to Claim Part of Your Household Bills as Business Expenses

With more people working from home than ever before, it’s important to know what costs you can claim when running your business. Many sole traders and small business owners don’t realise they can offset part of their household bills against their taxable income — potentially saving money and making tax time a lot less stressful.

In this blog, we’ll break down what you can claim, how HMRC calculates it, and your options for doing it correctly.

Can You Claim Household Expenses?

The short answer is yes — if you use part of your home for business purposes, HMRC allows you to claim a proportion of certain household bills. This could include:

• Electricity and gas
• Water
• Internet and phone bills
• Rent or mortgage interest
• Home insurance

It’s important to note that you can only claim the portion used for business, not your total household bill.

Two Methods for Claiming Expenses

HMRC provides two ways to calculate your claim: the simplified flat rate method and the actual costs method.

1. Simplified Flat Rate Method - Subject to change

This is the easiest method for many sole traders. You can claim a flat monthly rate depending on how many hours you work from home:

Hours worked from home per month

Flat rate you can claim

25–50 hours £10

51–100 hours £18

101+ hours £26

✅ Pros: Easy, no detailed calculations required.
✅ Best for: Those who work from home part-time or don’t want to track exact bills.

2. Actual Costs Method

If you work from home extensively, you might benefit from calculating the exact proportion of your household bills used for business.

Here’s how it works:

1. Identify your total household bills (utilities, rent/mortgage interest, internet, etc.)
2. Calculate the proportion of your home used for work — usually based on the number of rooms or area used.
3. Multiply your bills by the proportion used for business.

💡 Example:
If you have 5 rooms and use 1 as a home office for 40% of the time, you can claim (1/5 × 40%) = 8% of your household bills.

✅ Pros: Can result in a higher claim than flat rate.
✅ Best for: People working from home full-time or with significant home-office expenses.

Important Tips

• Keep records: Save all bills, receipts, and notes on how you calculated your claim. HMRC may ask for proof.
• Be reasonable: Only claim for the part of your home genuinely used for business.
• Employees vs. Sole Traders: Employees working from home can only claim limited tax relief if their employer requires them to work from home. This guidance mainly applies to self-employed individuals.
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Bottom Line

Working from home doesn’t just save on commuting — it can also save you money on taxes. By understanding what you can claim and using either HMRC’s flat rate or actual cost method, you can reduce your taxable profit and keep more of your hard-earned money.

💡 Pro Tip: If you’re unsure which method is best for you, speak to us today for more information. We can help you choose the most tax-efficient option and make sure your records are HMRC-compliant.