What is the flat-rate home office allowance for Sole Traders?

For the 2026 tax year, Sole Traders can claim £10/month for 25-50 hours, £18/month for 51-100 hours, and £26/month for over 101 hours worked from home.

Can a Limited Company Director claim a home office allowance?

Yes, working directors can claim a flat-rate allowance of £6 per week (£26 per month), which reduces corporation tax and requires no receipts.

UK Home Office Allowances Explained

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Key Concepts

There are two commonly confused ideas when talking about working from home:

Working from home allowance – a simplified flat-rate amount allowed by HMRC.
Use of home as office (actual costs) – a proportion of real household expenses.

These are not interchangeable. Which one you can use depends on whether you are self-employed or operating through a limited company.

Sole Traders (Self‑Employed)

Option A: Simplified Home Office Allowance

HMRC allows a flat-rate deduction based on hours worked at home per month.

Covers: heat, electricity, lighting, power.

Claimed: on the Self Assessment tax return.

Hours worked at home (per month)	Monthly claim (2026)
25–50 hours	£10
51–100 hours	£18
101+ hours	£26

Option B: Actual Use of Home Costs

You may instead claim a proportion of real household expenses based on space and time used for business.

If a room is used exclusively for business, part of your home may lose Private Residence Relief for Capital Gains Tax.

Typical allowable costs:

Electricity and gas
Water
Council tax
Rent or mortgage interest (not capital)
Broadband (business proportion)

Actual Costs Calculator

If you choose to claim a proportion of actual expenses, use this tool to determine your apportionment.

Total rooms in home (excl. kitchen/bath):

Rooms used exclusively for business during work hours:

Average hours worked per week:

Weeks worked per year (e.g. 48):

Enter your monthly bills:

Rent / Mortgage Interest:

Council Tax:

Utilities (Gas/Elec/Water):

User Confirmation: I am electing to apportion my actual household expenses for my tax claim. I have reviewed the HMRC guidance and I am satisfied that the inputs I have provided represent a fair and reasonable basis for apportionment. I confirm that the resulting calculation is, in my view, in accordance with HMRC rules for my specific circumstances.

Telephone, Broadband & Additional Claims

A common mistake is assuming the "Flat Rate" or "Simplified" allowance covers everything. In fact, telephone and broadband expenses are treated separately and can usually be claimed in addition to your home office allowance.

For Sole Traders

HMRC allows you to claim a fair and reasonable business proportion of your home phone and broadband costs, including usage, even if the contract is personal.

Proportional Split: You can claim a "fair and reasonable" percentage of your total bill (e.g., if you use the internet for work 50% of the time, claim 50% of the bill).
Simplified Expenses: If you use the monthly flat rate (£10/£18/£26), you can still claim your business phone/internet costs on top of that amount.

For Limited Company Directors

The rules for directors are much stricter. To claim these costs tax-free, they must be additional expenses incurred solely because of your work.

The Broadband "Trap": If you already have a home broadband contract for personal use, you cannot claim a portion of it back. HMRC argues that you would have paid for it anyway, so it isn't an "additional" cost.
Telephone: You can only claim the cost of actual business calls made on a private line, not a proportion of the line rental or the monthly plan.
💡 Pro-Tip for Directors: To claim 100% of these costs legally, the contract must be in the Company Name. If the company is the account holder, it can pay the full bill tax-free, even if you use it for personal tasks occasionally.

Other Claimable Office Expenses

Regardless of your business structure, you can claim 100% of these daily business essentials:

Consumables: Printer ink, paper, stationery, and postage.
Software: Subscriptions for Xero, Microsoft 365, or industry-specific tools.
Equipment: Laptops, monitors, and office furniture (claimed via Capital Allowances).

Limited Company Directors (Working / Executive)

A working director is generally treated as an employee for expense purposes, even if no PAYE salary is paid and income is taken mainly as dividends.

Option A: £6 per Week Working From Home Allowance

Weekly	£6
Monthly	£26
Annual	£312

Paid by the company
No receipts required
No tax or National Insurance
Reduces corporation tax

Option B: Actual Additional Costs

The company may reimburse the director for additional household costs incurred due to work.

These must be costs that would not have been incurred otherwise, not a proportion of existing household bills.

This requires reasonable calculations and evidence and is rarely worth the extra complexity.

Option C: Rental / Licence to Occupy

The director personally rents space in their home to the company.

Company deducts rent
Director declares rental income
Higher admin and tax risk

This option can create Capital Gains Tax, mortgage, and insurance issues and is usually not recommended for small owner‑managed companies.

Limited Company Directors (Office‑Holder Only / Non‑Working)

Where a director is genuinely non‑working or non‑executive:

No £6 per week allowance
No simplified or hourly allowance
No automatic expense claims

The only potential route is a formal licence to occupy, if the company genuinely uses space in the home.

Summary Table

Status	Flat rate option	Actual costs	Rental option
Sole trader	Hours‑based allowance	Yes	No
Ltd director (working)	£6 per week	Yes (limited)	Possible but not ideal
Ltd director (office‑holder only)	None	No	Only option

HMRC guidance distinguishes between reimbursed expenses and personal tax relief.
This guide reflects current HMRC practice for small owner-managed businesses.
This guide does not provide specific tax advice or guidance related to your individual circumstances.