Whether you are an employee or self-employed, you can claim tax relief for working from home. The rules differ depending on which you are. Here is how the £6/week flat rate and the actual-cost method work for 2025/26.
Working from home has gone from a perk to a norm, and the tax system offers relief for the extra costs it creates, from the heating you would not otherwise have switched on to the broadband you now rely on for work. But the rules are not one-size-fits-all. Employees and the self-employed are treated quite differently, the eligibility bar for employees rose sharply after the pandemic, and there is a real choice to make between a simple flat rate and a potentially more generous actual-cost calculation. This guide sets out both routes for the 2025/26 tax year.
The first thing to establish is which camp you are in, because the two systems barely overlap. An employee claims tax relief on a fixed allowance, reducing the tax they pay. A sole trader deducts a business expense from their profit before tax is calculated. The language sounds similar, but the mechanics, the amounts and the eligibility rules are distinct.
For employees, the working from home allowance is a flat £6 a week (£26 a month) that you can claim without keeping a single receipt. You do not get £6 in cash; you get tax relief on £6, so the saving is £6 multiplied by your tax rate: £1.20 a week for a basic-rate taxpayer, £2.40 for a higher-rate taxpayer, and £2.70 for an additional-rate taxpayer. Over a full year that is roughly £62 to £140.
The catch is eligibility. During the pandemic, HMRC relaxed the rules so almost anyone working from home could claim. That relaxation ended on 5 April 2022. From 6 April 2022 onward, you can only claim if you are required to work from home, meaning:
Choosing to work from home for convenience does not qualify, and neither does hybrid working where an office is available to you. If your employer reimburses your home-working costs, you cannot also claim relief on the same costs.
Employees claim either through their Self Assessment tax return (if they file one) or through HMRC's online service using form P87. If you genuinely incur higher additional costs than £6 a week, you can claim the actual amount instead, but you must keep evidence such as bills and a reasonable apportionment.
Sole traders and partners have a more flexible and often more valuable set of options. Because home-working costs are a business expense rather than personal tax relief, they reduce your taxable profit directly. There are two methods.
The simplified expenses scheme gives a flat monthly deduction based purely on how many hours a month you work from home. No bills, no apportionment, no records of utilities required.
| Hours worked from home per month | Flat-rate monthly deduction |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
Someone working from home full-time deducts £26 a month, or £312 a year. The flat rate covers light, heat and power only. It does not cover rent, mortgage interest, council tax, broadband or telephone, which you can still claim separately on a business-proportion basis even when using the flat rate for utilities.
The actual cost method lets a sole trader claim a fair proportion of all the additional household running costs caused by working from home. This typically includes a share of:
The apportionment is usually based on the number of rooms used for business and the proportion of time each is used for work versus private life. For example, a sole trader using one of five rooms as an office for 50 hours a week out of a 168-hour week would claim a fraction of the relevant bills reflecting both the room count and the business hours.
The actual cost method is more work but frequently produces a larger deduction than the flat rate, particularly for those who work long hours from a home with high running costs. The sole trader tax calculator lets you see how a larger use-of-home deduction flows through to your taxable profit, income tax and Class 4 National Insurance.
Sophie is a self-employed graphic designer who works from home around 45 hours a week, comfortably over 101 hours a month. She rents a two-bedroom flat for £1,200 a month and uses the second bedroom solely during working hours as her studio.
Under the flat rate, she claims £26 a month for utilities, £312 a year, plus a business proportion of broadband, which is simple but limited.
Under the actual cost method, she apportions her bills. The flat has four usable rooms (lounge, kitchen, two bedrooms); one is the studio. She uses it for work roughly 45 hours of a 168-hour week. Applying a room-and-time apportionment to her £14,400 annual rent, plus shares of electricity, heating, council tax, insurance and broadband, her reasonable claim comes to around £900 for the year, nearly three times the flat rate.
For Sophie, the actual cost method clearly wins, and the difference, a £588 larger deduction, saves her roughly £170 in income tax and Class 4 National Insurance combined at basic rate. Good record-keeping is what makes the larger claim defensible. Tools that categorise expenses automatically make the apportionment far less painful than a shoebox of receipts.
The working from home allowance sits alongside several other tax rules, and a few interactions are worth flagging.
This is the most important trap for the self-employed. If a room is used exclusively for business, with no private use whatsoever, the part of your home it represents can lose Private Residence Relief and become chargeable to Capital Gains Tax when you sell. The fix is simple: ensure any room used for business also sees some genuine private use, even occasional. This preserves full Private Residence Relief while still supporting a reasonable use-of-home claim. The flat-rate methods avoid this issue entirely because they do not depend on exclusive use.
Working from home does not normally make your home liable for business rates, provided the business use is minor and the rooms remain primarily domestic. A dedicated, customer-facing workspace (such as a converted outbuilding used solely as a shop or workshop) could attract business rates and affect Private Residence Relief, so heavy or exclusive commercial use needs careful thought.
The HMRC simplified expenses scheme also covers a flat-rate mileage deduction for vehicles and a flat rate for living in your business premises. You can mix and match: using the simplified flat rate for home working does not stop you using actual costs elsewhere, but you must apply each method consistently within its category.
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and file quarterly under Making Tax Digital for Income Tax, with thresholds of £30,000 from April 2027 and £20,000 from April 2028. Your use-of-home deduction, whether flat rate or actual cost, will feed into those quarterly updates rather than a single annual return, which makes recording it accurately throughout the year more important than ever.
There is no single right answer; it depends on your hours, your home and your appetite for record-keeping. The flat rate wins on simplicity and is ideal if your home-working costs are modest or your hours are low. The actual cost method wins on value for anyone working long hours from a home with meaningful running costs, especially renters who can apportion a slice of rent. You can review and switch methods each tax year, choosing whichever gives the larger deduction.
The £6-a-week figure gets all the headlines, but for a self-employed person working full-time from a rented flat, the actual-cost method can be worth several times more. The key is keeping the records that justify the larger claim.
If you are self-employed, the practical next step is to compare both methods against your real figures. Run them through the sole trader calculator to see the after-tax difference, and lean on automated expense categorisation to keep the apportionment evidence in order ahead of MTD.
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