How do the self-employed claim working-from-home costs?
If you are self-employed and work from home, you can claim a proportion of your home running costs as a business expense, reducing your taxable profit. You can use a simplified flat rate based on the hours you work from home, or work out the actual business share of your costs.
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Check what you're owed →Self-employed home-working relief is quite different from the employee version. As a sole trader, you deduct allowable business expenses from your income to arrive at your taxable profit, and a fair share of your home costs — such as heating, electricity and internet — can be part of that, provided they relate to running your business from home.
There are two approaches. The simplified expenses method gives you a flat monthly amount based on how many hours a month you work from home, which avoids fiddly calculations. The alternative is to work out the actual business proportion of your household bills, typically by reference to the rooms used and time spent, which can give a larger deduction but needs careful records.
Whichever method you choose, the costs must genuinely relate to your business, and you should keep evidence to support your figures. The flat rate is simpler and lower-risk, while the actual-cost method can be more generous if you have significant home-working costs. It is worth comparing the two to see which suits your situation before you file.
How to claim home-working costs when self-employed
- Estimate your home-working hours. Work out how many hours a month you typically work from home, which is needed for the simplified method.
- Compare the two methods. Check whether the flat rate or the actual business share of your bills gives the better, justifiable result.
- Keep supporting records. Retain bills and your calculations so you can back up the figures you claim if asked.
- Include it in Self Assessment. Enter the home-working expense on your tax return to reduce your taxable profit.
Frequently asked questions
- What is the simplified expenses method?
- A flat monthly amount you can claim based on the number of hours a month you work from home, avoiding detailed cost calculations.
- When is the actual-cost method better?
- When your real business share of household bills is higher than the flat rate, though it requires more detailed records and apportionment.
- What costs can I include?
- A fair business proportion of costs such as heating, lighting, electricity and internet that relate to running your business from home.
- Do I need to keep records?
- Yes, especially for the actual-cost method. Keep bills and a note of how you worked out the business proportion.
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