Work From Home Tax Expenses: What UK Sole Traders Can Actually Claim

By Ben, Founder of Solofold  ·  Published May 2026  ·  7 min read

With over 20 years running my own consultancy from home, I've claimed these expenses every year — and helped dozens of fellow sole traders do the same. Most people claim less than half of what they're entitled to.

The biggest myth about working from home

Most sole traders who work from home think the rules are complicated, so they claim nothing. That's a costly mistake. HMRC explicitly allows home working expenses — you just need to calculate them correctly.

The principle is simple: you can claim the business proportion of any household expense that is also used for work. Not the full amount — the business share only.

There are two methods HMRC accepts. Knowing which one is better for your situation can make a significant difference to your tax bill.

Method 1: The flat rate (simple but often lower)

HMRC offers a simplified flat rate based on the number of hours you work from home each month. No receipts needed. No calculations. Just claim the flat amount.

25-50 hours/month: £10/month (£120/year)

51-100 hours/month: £18/month (£216/year)

101+ hours/month: £26/month (£312/year)

For most full-time home workers, this flat rate is significantly lower than the actual proportion method. It's useful if your home costs are low or if you work part-time from home.

Method 2: The proportion method (usually better)

This is the method most full-time home workers should use. You calculate the business proportion of your actual household costs. More administration, but usually a larger deduction.

Step 1: Calculate the space proportion
Count the number of rooms in your home. If your office is one dedicated room out of eight rooms, your space proportion is 1/8 = 12.5%.

Step 2: Calculate the time proportion
How many hours per week is the room used for work vs personal use? If you work 8 hours/day, 5 days/week, that is 40 hours. A week has 168 hours. Time proportion: 40/168 = 24%.

Step 3: Apply to each expense
Combined proportion: 12.5% × 24% = 3% of total household costs. Apply this to each eligible expense.

Note: If you have a dedicated room used exclusively for work (not also a bedroom or living room), you only need the space proportion — not the time adjustment.

What you can claim — the full list

Heating and electricity
Your combined energy bill. Apply your business proportion. Example: Annual bill £2,400 × 12.5% space × 24% time = £72 claimable.

Broadband / internet
The business proportion of your internet bill. If you use the internet 70% for work and 30% personal, claim 70% of the monthly bill. Most sole traders can legitimately claim 60-80% of their broadband.

Phone
The business call and data proportion of your phone bill. Keep a one-month log of business vs personal calls as evidence.

Mortgage interest (not capital)
If you own your home, you can claim the business proportion of your mortgage interest — not the capital repayment. Same proportion calculation as above.

Rent
If you rent, apply the business proportion to your monthly rent. Same calculation.

Council tax
Apply the business proportion to your annual council tax bill.

Water rates
If applicable — the business proportion of your water bill.

Worked example: A real calculation

Sarah is a freelance copywriter. She has a dedicated office in a 6-room house. She works full-time from home — 40 hours/week. Here is her annual household costs and what she can claim:

Space proportion: 1 room ÷ 6 rooms = 16.7%

Time proportion: Room dedicated to work — no time adjustment needed

Rent: £14,400/year × 16.7% = £2,403

Energy: £2,000/year × 16.7% = £334

Broadband: £600/year × 80% = £480

Council tax: £2,200/year × 16.7% = £367

Phone: £600/year × 70% = £420

Total claimable: £4,004/year

At 20% basic rate tax: £801 saved. Sarah was claiming £312 using the flat rate. The proportion method saves her an additional £489 per year — every year.

What you cannot claim

Mortgage capital repayment — Only the interest portion is claimable, not the capital you repay each month.

Home improvements — A new kitchen or bathroom is not a business expense even if you work from home.

TV licence — HMRC does not allow this as a business expense for sole traders.

Food and drink at home — Your personal meals while working at home are not business expenses.

Important: Capital gains tax risk for home owners

If you own your home and claim a proportion of your mortgage interest and other costs, be aware of one potential issue: if you ever sell your home, HMRC may apply Capital Gains Tax to the proportion of your home used exclusively for business.

This only applies if the room is used exclusively for business with no personal use at all. If your office also serves as a spare bedroom occasionally, this risk largely disappears. Worth discussing with your accountant if you own your property.

Keep records — HMRC may ask

Keep bills, statements, and a note of your calculation method for at least 5 years. HMRC can ask for evidence of any expense you've claimed. The calculation itself is simple — but having the supporting bills on file protects you if questioned.

The Tax Year Companion has a dedicated home working section that calculates your claimable amount automatically. Enter your bills and your proportions — it works out exactly what goes on your Self Assessment return.