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A self-employed person who works from home can generally claim more tax-deductible expenses than an employee or director.

A self-employed worker can claim the following for use of home:

  • All the costs incurred for exclusively for business purposes
  • A proportion of all the other costs of running the home, including energy costs, insurance, council tax, and mortgage interest or rent. There is no set way of apportioning these costs – the apportionment must be reasonable based on the work use of the home.

The capital element of mortgage payments cannot be claimed.

The person claiming the expenses should make sure they, rather than their spouse or partner, are paying them.

As an alternative to claiming actual costs, a simplified rate set by HMRC can be used, based on the number of hours worked from home. This is a low amount, and using actual expenditure is likely to give higher tax relief.

A couple of things to watch out for:

If part of the home is used exclusively for business, Capital Gains Tax main residence relief cannot then be claimed on that part of the home when it is sold.

If the business is large enough, the property could become liable for business rates