Working From Home Tax Relief: Full Guide for Sole Traders

Introduction

More sole traders are working from home than ever before — whether full-time, part-time, or a few days a week. The good news is that HMRC allows you to claim tax relief on the costs of running your business from home.

This guide explains:

• what counts as “working from home”
• which home-related expenses you can claim
• simplified expenses vs actual cost calculations
• how to avoid common mistakes
• and how to include these claims on your Self Assessment

For a deeper dive into the wider topic of allowable expenses, see our Guide to Allowable Expenses.

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What Counts as Working From Home?

HMRC considers you to be working from home if you use your home as a workplace for your business. This includes:

• full-time home working
• part-time home working
• occasional admin done from home
• using a room as an office, studio, workspace, storage area or workshop

Even if you work on-site for clients, you may still be eligible to claim part of your home costs if you work from home regularly.

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What You Can Claim When Working From Home

There are two ways sole traders can claim working-from-home costs:

1. Simplified expenses (flat rate)
2. Actual costs (apportioned fairly)

Let’s break them down.

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Option 1 — Simplified Expenses (Flat Rate Method)

HMRC lets sole traders claim a monthly flat rate based on how many hours per month you work from home.

Simple, quick and requires no calculations.

HMRC’s current flat rates:

• 25–50 hours per month → fixed amount
• 51–100 hours per month → higher fixed amount
• 101+ hours per month → highest fixed amount

(Exact values change occasionally — check HMRC for current rates.)

Pros:

• Easiest method
• No need to apportion bills
• No detailed records required (other than hours worked)

Cons:

• Often results in smaller claims than the actual cost method
• Doesn’t include telephone or internet usage — these must be claimed separately

Simplified expenses are great for sole traders who want a hassle-free approach.

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Option 2 — Actual Costs (Apportioned Method)

If you prefer accuracy, you can claim a percentage of your actual household costs, based on how much of your home you use for business.

Costs you may apportion include:

• rent or mortgage interest
• council tax
• electricity and heating
• water
• broadband and phone
• home repairs related to your workspace

How to calculate your claim

You need a reasonable method. Common approaches include:

• Number of rooms used for business
• Amount of time that room is used for work
• Proportion of household usage

Example:
If you use one room in a five-room home as an office 40% of the time, you might claim:

(1 ÷ 5 rooms) × 40% business use = 8% of eligible bills

HMRC accepts any fair, consistent method.

Pros:

• Often results in a higher allowable claim
• Reflects your real business use

Cons:

• Requires accurate record keeping
• Must justify the percentage split if asked

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Phone and Internet Usage

These are treated separately:

• If you use your personal phone for work → claim the business portion
• If you use home broadband → claim the business portion

Example:
If you estimate 30% of your broadband usage is work-related, claim 30%.

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What You Cannot Claim

Not all home-related costs qualify.

Not allowable:

• Full rent/mortgage (only a portion is allowed)
• Personal phone use
• General home improvements
• Furniture used personally (e.g., sofa, dining table)
• Food and drink consumed at home

Caution: Exclusive business use

If a room has exclusive business use, you may impact Capital Gains Tax when selling your home.
It’s usually wise to use your workspace occasionally for normal home activities to avoid this.

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How to Claim Home Office Costs on Self Assessment

When completing your tax return:

• Go to the self-employment section (SA103)
• List your allowable expenses in the relevant fields
• Either enter simplified expenses
• Or enter your apportioned calculated amount

If you're unsure which method to use, QTax helps guide you through the process step-by-step.
See how in the Product Tour.

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Common Mistakes Sole Traders Make

Claiming the full cost of a room

This can trigger Capital Gains Tax issues. Always split fairly.

Forgetting to claim broadband or phone usage

These are among the most commonly missed expenses.

Using simplified expenses incorrectly

The flat rate depends on hours worked per month, not per week.

Not keeping basic records

HMRC may ask for evidence of how you calculated your claim.

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How QTax Helps Sole Traders Claim Correctly

QTax is designed specifically for UK sole traders and supports you in claiming home-based expenses confidently and accurately.

✔ Clear explanations

Simple descriptions of what you can claim when working from home.

✔ Smart prompts

We highlight inconsistencies or missing information before you submit.

✔ Easy Self Assessment filing

QTax is fully HMRC-recognised and supports digital submission.

✔ Designed for simplicity

No overwhelming corporate features — just the essentials.

Learn more on our Pricing page.

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FAQs

Do I need receipts to claim working from home expenses?

You don’t need receipts for simplified expenses, but you do need them for actual costs.

Can I claim rent or mortgage?

Yes — but only a percentage based on business use.

What if my working pattern changes?

You can adjust your calculations each year.

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Conclusion

Working from home can reduce your tax bill significantly if you understand HMRC’s rules. Whether you choose simplified expenses or actual cost apportionment, the key is consistency and fairness.

QTax guides you through allowable home-working expenses during your Self Assessment so you can file accurately and confidently.