Working from home: claiming a deduction
The home allowance and actual cost apportionment - explained
If you work from home, the company can pay you a contribution towards home running costs. Since 6 April 2026, directors can no longer claim these costs personally through Self Assessment, so the claim must be made through the company. There are two approaches.
HMRC's simplified use of home allowance
The company can pay you up to £6 per week (£312 per year) towards home working costs with no need to calculate actual costs or keep receipts. It is recorded through the director's loan account, is deductible for Corporation Tax, and creates no personal tax charge. This is the simplest, lowest-risk option.
Actual cost apportionment
Alternatively, you can claim the additional running costs caused by working from home, mainly the extra heating, electricity, and metered water, apportioned by the number of rooms used and the hours worked. This can be higher than the flat rate but needs supporting records. Note that fixed costs you would pay anyway (rent, mortgage interest, council tax, and broadband line rental) cannot be apportioned in this way; broadband is only claimable if the contract is in the company's name. Contact us if you want to use the actual cost method.
💡 Important: Do not claim a proportion of your mortgage or rent, and avoid using any room exclusively for business. Exclusive business use of part of your home can reduce your private residence relief and create a Capital Gains Tax charge when you sell your home. Keeping some personal use of the space, or using the weekly flat rate, avoids this.
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