If you run your business from the kitchen table or a spare room, part of your household costs is a business expense. There are two ways to claim it, and the one most people pick first is not always worth the most.
Written and reviewed by James Whitfield · Last reviewed 19 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
Sole traders can claim either HMRC's flat rate for working from home, £10, £18 or £26 a month depending on hours worked at home,1 or a reasonable share of actual costs: heating, electricity, Council Tax, mortgage interest or rent, and internet and phone use.2 The flat rate does not include phone or internet, so you claim the business share of those separately.1 In our worked example the actual-cost method gives £1,076 against £588 for the flat rate. You cannot claim either if you use the £1,000 trading allowance instead of expenses.2
Related: Allowable expenses: full list · Travel expenses · £1,000 trading allowance
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Simplified expenses let you claim a flat monthly amount based on the hours you work at home, so you do not have to split your bills between personal and business use.1
| Hours worked at home in the month | Flat rate |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
The maximum is £26 × 12 = £312 a year. The flat rate covers household running costs only. It does not include phone or internet, which you claim at the business share of the actual bills.1
GOV.UK says you may claim a proportion of heating, electricity, Council Tax, mortgage interest or rent, and internet and telephone use, using a reasonable method of dividing the costs, for example by the number of rooms you use for business or the time you spend working from home.2
A common approach is rooms then time: if you use one of five main rooms for work, a fifth of the bills relates to that room. If the room is also used privately at other times, reduce the share to the working hours. Write down how you worked it out and use the same method each year.
Alex is a graphic designer who works about 110 hours a month from a spare room, one of five main rooms. The room doubles as a guest room, so it is not used exclusively for business. The 2026/27 household bills are £2,100 for gas and electricity and £1,900 Council Tax. Broadband costs £360 a year, half of it for business, and the mobile £240, with 40% business use.
| Flat rate: £26 × 12 months | £312.00 |
| Broadband: 50% of £360 | £180.00 |
| Mobile: 40% of £240 | £96.00 |
| Total with the flat rate | £588.00 |
| Energy: 1/5 of £2,100 | £420.00 |
| Council Tax: 1/5 of £1,900 | £380.00 |
| Broadband and mobile (as above) | £276.00 |
| Total with actual costs | £1,076.00 |
The flat rate is quicker and needs no apportionment, so it can still be the right choice in a small flat, if you work few hours at home, or if you would rather not keep the calculation. Renters can include a share of rent, which often tips the balance towards actual costs.
When you sell your main home, Private Residence Relief usually means no Capital Gains Tax. One of the conditions is that you have not used part of the home exclusively for business. Using a room as a temporary or occasional office does not count as exclusive business use.3
If a room is used only for the business, you may have some Capital Gains Tax to pay on that part when you sell.3 Keeping some private use of the room avoids the issue; the business share of bills is then worked out on time as well as rooms.
A laptop, printer, desk or chair is not part of the use-of-home claim. Under the cash basis you claim it as an ordinary allowable expense; under traditional accounting it goes through capital allowances, usually the Annual Investment Allowance, which gives full relief in the year of purchase.2 If the item is also used personally, claim only the business share.
For 2026/27 it is £10 a month for 25 to 50 hours worked at home, £18 for 51 to 100 hours and £26 for 101 hours or more. It does not cover phone or internet, which you claim separately at the business share.
Whatever a reasonable, consistent method gives. HMRC suggests splitting bills by the number of rooms used for business or the time spent working at home. If that is complicated, the flat rate of up to £312 a year needs no calculation.
Yes, the business share. If half your broadband use is for work, claim half the bill. You can do this alongside the flat rate, because the flat rate does not include internet or phone costs.
You can claim a business share of the mortgage interest, not the capital repayments. Renters can claim a share of rent instead.
Yes, a proportion of it under the actual-cost method, worked out the same way as your other household bills. The flat rate already stands in for household running costs, so do not add Council Tax to it.
No. This page covers the self-employed rules. Employees have separate rules for working from home, so do not rely on employee guidance for a sole trader claim.
The rates, thresholds and rules in this guide are drawn from the official HMRC and GOV.UK sources below, using the confirmed 2026/27 figures. Each link opens the relevant official page in a new tab.
The sole trader tax calculator turns this guidance into a concrete monthly take-home and tax reserve estimate, based on 2026/27 HMRC rates. Enter taxable profit — not turnover.