On 6 April 2026 the tax relief employees could claim for household costs they incurred working from home was withdrawn. The flat £6 a week claim went, and so did the option of claiming actual additional costs where the employer had not reimbursed them. HMRC put the number affected at around 300,000 people, losing £62 a year at the basic rate and £124 at the higher rate.

None of that touched the self-employed. If you are a sole trader, the two routes that have always been available are both still open, and the better of them is usually worth several times what employees just lost. It is also one of the most commonly under-claimed deductions there is, because the flat rate is easy and nobody ever checks whether it is the right answer.

Route one: the flat rate

HMRC's simplified expenses scheme lets you claim a fixed monthly amount based on how many hours a month you work at home, with no apportionment, no bills and no calculation:

  • 25 to 50 hours a month — £10 a month
  • 51 to 100 hours a month — £18 a month
  • 101 hours or more a month — £26 a month

Fewer than 25 hours in a month and you get nothing for that month, so the claim is worked out month by month rather than as an annual average. The absolute ceiling is £312 a year. The hours that count are hours spent on core business activity at home: doing the work, keeping the records, quoting, invoicing, ordering and marketing.

What the flat rate covers is the running cost of the household — heat, light, power and the general cost of occupying the space. What it does not cover is telephone and broadband, which are claimed separately on top under either route.

Route two: the actual cost of the space you use

The alternative is to work out the genuine business proportion of what the house actually costs. HMRC accepts apportionment by floor area, by time, or by both together, and the costs you can take a share of are:

  • Fixed costs — rent, or mortgage interest only and never the capital repayment, council tax, buildings and contents insurance, and general maintenance of the property.
  • Running costs — electricity for heating, lighting and equipment, gas, and metered water where the business genuinely uses a material amount of it.

The method HMRC uses in its own examples is to take the business room as a proportion of the floor area, then apply a second fraction for the share of the time that room is in business use rather than domestic use. Where a space is used for the business and for nothing else, the second fraction falls away and the area proportion stands on its own.

Worked example: one house, two very different rooms

The figures below are illustrative. A self-employed joiner owns a three-bedroom semi. The annual household costs are mortgage interest £4,200, council tax £2,150, buildings and contents insurance £390, gas and electricity £1,780 and water £420 — £8,940 in total, of which £6,740 is fixed cost and £2,200 is running cost.

Room A — the small bedroom used for quotes and paperwork
10% of the floor area, in business use about 10 hours a week and used domestically the rest of the time.
Fixed costs: £6,740 × 10% × (10 ÷ 168) = £40
Energy: £1,780 × 10%, halved for domestic use of the same room = £89
Total under the actual method: £129
Flat rate at 43 hours a month: £120
Room B — the converted garage used as a workshop
18% of the floor area, in use for the business around 45 hours a week and used for nothing else.
Fixed costs: £6,740 × 18% = £1,213
Energy attributable to workshop heating, lighting and machinery: £640
Total under the actual method: £1,853
Flat rate at 195 hours a month: £312
The same household costs give a £129 claim on a part-time spare room and a £1,853 claim on a workshop used only for business Same house, same bills, two different answers Illustrative. £8,940 of annual household costs, apportioned two ways. Room A — spare bedroom, 10 hours a week, also used domestically Actual method £129 Flat rate £120 — and no records to keep Room B — converted garage workshop, 45 hours a week, no other use £1,853 Flat rate £312 Bars are to scale. The gap on Room B is £1,541 of deduction — £401 of tax at 20% plus 6% Class 4, £647 at 40% plus 2%.

The point of the two rooms is that they lead to opposite conclusions from identical bills. On Room A the actual method is worth £9 more than the flat rate and costs an afternoon a year in record-keeping, so the flat rate wins on any sensible reading. On Room B it is worth £1,541 more — £401 of tax at the basic rate once Class 4 National Insurance at 6% is counted, and £647 at the higher rate with Class 4 at 2% — and taking the flat rate out of habit throws that away every single year.

Phone and broadband sit outside both routes

Neither method includes communications, so these are claimed separately whichever route you take. Take the business proportion of each: a £396 annual broadband bill at 40% business use is £158, and a £312 mobile bill at 70% business use is £218. That is £376 a year on top of the home claim, and it is missed more often than the home claim itself.

Keep the basis of the percentage written down somewhere. An itemised month, or a note of how the split was arrived at, is the difference between a figure you can defend and a figure you invented.

The two costs of doing it properly

Room B produces the bigger deduction because the space is used for the business and nothing else. That same fact carries two consequences, and neither is hypothetical.

Private residence relief. Full relief from capital gains tax on selling your home depends on not having used any part of it exclusively for business. HMRC is explicit that using a room as a temporary or occasional office does not count as exclusive use, so Room A is untouched. A garage converted into a workshop that is used for nothing else is a different matter, and on a house showing a substantial gain the tax cost of that can exceed years of the deduction. The usual answer is to make sure the space genuinely has some domestic use — the bikes, the freezer, the Christmas decorations — and to claim on that basis, which costs a fraction of the claim and protects the relief.

Business rates. Working from home does not normally bring you into the rating list. It can where the property is part business and part domestic, where customers come to you, where you employ people at the property, or where you have altered the property for the business — converting a garage is the example the guidance itself uses. If any of those apply, the Valuation Office Agency decides whether part of the property should be rated separately, and small business rate relief may then take the bill to nil. Finding that out deliberately is better than finding it out by letter.

Does the cash basis change any of this?

Not for the use of home claim itself. The cash basis has been the default for sole traders since 6 April 2024, and both routes work the same way under it. One related restriction did go: the old £500 annual cap on interest deductions under the cash basis was removed from the 2024/25 tax year, so mortgage interest apportioned to business use is now deductible on the same basis as it is under accruals accounting. Our post on cash basis versus accruals sets out where the two methods still genuinely diverge.

What Making Tax Digital does to the claim

Quarterly updates report totals by expense category, so the flat rate slots straight in as a monthly figure with nothing to work out. The actual method does not, because the apportionment depends on annual bills that are not all in yet. The workable pattern is to post a sensible monthly estimate through the quarters and true it up in the end-of-year adjustment once the final bills have landed, keeping the calculation itself on one sheet you update annually.

What to do this week

  1. Write down every space in the house that is used for the business and roughly what share of the floor area it is.
  2. For each one, write down the hours a week it is used for the business and whether it is used for anything else.
  3. Pull twelve months of bills: rent or mortgage interest, council tax, insurance, gas, electricity and water. One total.
  4. Run both calculations. If the actual method beats the flat rate by less than about £150 a year, take the flat rate and spend the time elsewhere.
  5. Claim the business share of broadband and mobile separately, whichever route you chose, and note down how you arrived at the percentage.
  6. If any space is used exclusively for the business, decide deliberately whether to keep it that way. Check the private residence relief and business rates position before you claim rather than after.
  7. Put the calculation on one sheet with the date on it, and update it once a year when the bills change.

Our allowable expenses guide covers everything that sits alongside this, and if the van is the bigger number, the post on mileage against actual vehicle costs runs the same comparison for vehicles. If you are employed as well as self-employed, the April change hit one half of your position and not the other — our post on being employed and self-employed at the same time explains how the two sides interact.

Where we help

We run both calculations on your actual bills, pick the route that is worth more after the record-keeping, and flag the private residence relief and business rates questions before a claim creates a problem rather than after. It is part of our packages from £19 + VAT a month. Get started.