How to Claim a Work From Home Tax Deduction in the UK?

The rise of remote work has reshaped how professionals in London and across the UK approach their daily routines. With more people setting up offices at home, the question of how to claim a work from home tax deduction has become increasingly relevant.

While HMRC offers tax relief for home-working expenses, the process varies depending on your employment status, type of expenses, and how much of your home is used for work.

This guide explores everything you need to know about what qualifies, how to claim, and the potential financial benefits of doing so correctly.

What Qualifies as a Work From Home Tax Deduction in the UK?

To claim tax relief for working from home, the expenses must be incurred wholly, exclusively, and necessarily in the performance of your duties. For employees, this typically means you’re required to work from home by your employer and haven’t been reimbursed for costs. For self-employed individuals, it relates to business use of the home for operational purposes.

Qualifying costs can include a portion of your electricity, gas, and water bills, your internet and phone usage, as well as office-related supplies. However, the key is that these expenses must relate directly to your work, not general household use. For example, you can’t claim your full broadband bill but may be able to claim a fair portion based on business use.

How Does HMRC Define “Home Working Expenses”?

HMRC refers to these expenses as additional costs incurred due to working from home. This definition is important because it excludes costs you would pay regardless, such as rent or general internet access, unless these are increased due to your work.

For instance, if you use your personal phone line for business calls or your energy consumption increases from using equipment throughout the day, these additional expenses could be eligible for a deduction. HMRC generally expects a clear link between the cost and your work to approve such claims.

What Are the Main Methods to Claim Home Office Deductions?

There are two primary ways to claim tax relief on home office expenses: the simplified expenses method and the actual cost method.

The simplified expenses method is straightforward and requires no receipts. You claim a flat rate depending on how many hours you work from home each month. For example, working over 101 hours per month from home allows a claim of £26, regardless of your actual costs. This approach is useful for self-employed individuals looking for simplicity and those with relatively low home working costs.

In contrast, the actual cost method involves calculating the exact proportion of home expenses used for business. This might include a percentage of your electricity bill, water usage, and even rent or mortgage interest if you’re self-employed. Although it requires detailed record-keeping, it can offer higher tax savings for those who use a dedicated workspace extensively.

Can Employees Claim Tax Relief for Remote Work?

Yes, but the eligibility criteria are specific. Employees can only claim tax relief if they are required to work from home by their employer and are not receiving any form of reimbursement for the related costs. This doesn’t apply to employees who choose to work from home or who are working under hybrid arrangements unless the employer mandates it.

To claim, employees must submit a P87 form via the HMRC website. The most common claim is a flat-rate deduction of £6 per week, totalling £312 annually, without needing to submit any receipts. However, employees who wish to claim more than this must provide evidence of the actual costs incurred due to working from home.

How Do Self-Employed Individuals Claim Home Office Expenses?

Self-employed workers have more freedom and flexibility when claiming home office expenses. Since the home often serves as their primary business location, HMRC allows a broader range of claims.

Claims are usually made via the Self Assessment tax return. You’ll need to determine what proportion of your home is used for business, how long it is used daily, and what expenses can be reasonably allocated. For example, if one room in a five-room flat is used as an office for eight hours a day, you could claim a proportion of your electricity and water bills based on that usage.

Other deductible expenses may include part of your rent, council tax, and internet charges. Maintaining accurate records is essential, especially if you’re audited.

What Types of Bills and Costs Can You Deduct?

The types of bills you can deduct vary depending on your employment status. Self-employed individuals can typically claim a portion of household bills such as heating, electricity, water, broadband, and council tax if these relate directly to business use.

For example, if you use a specific room exclusively as an office, then a percentage of those bills based on floor space and time used can be claimed.

Employees, on the other hand, are limited to additional costs incurred solely due to working from home. This might include a portion of heating and electricity but not things like rent or general council tax, unless there’s a direct increase caused by working from home.

How Can You Submit a Claim to HMRC?

For employees, the process involves using HMRC’s P87 form, which can be completed online or submitted by post. You’ll need to include your employer’s PAYE reference, your job details, and specify the amount of time you’ve worked from home. Claims can typically be backdated for up to four tax years, making it worthwhile to check if you’ve missed any eligible periods.

Self-employed workers will include these expenses in their annual Self Assessment tax return, usually under the “allowable expenses” section. It’s vital to retain documentation, including utility bills and calculation breakdowns, to substantiate your claim if HMRC requires it.

What Are the Common Mistakes to Avoid When Claiming?

Many people miss out on tax relief simply due to misunderstanding the rules or being overly cautious. A common mistake is assuming that occasional or hybrid working qualifies for the full allowance without verifying HMRC’s criteria. Others may overclaim by including full costs rather than the business-use portion, leading to issues if audited.

Neglecting to keep proper records is another frequent error. Even if you’re using the actual cost method, you should retain bills and document your calculations to demonstrate that your claims are fair and reasonable. Using the wrong claim method can also result in lower refunds or penalties.

How Much Tax Relief Can You Actually Get?

The amount of tax relief depends largely on your working hours, method of claim, and employment status. For employees using the flat rate, the maximum claim is £312 per year. While this may not seem substantial, it’s a helpful way to offset small increases in home working costs.

Self-employed individuals, particularly those using a dedicated workspace extensively, may be able to claim hundreds more by calculating their actual costs. If your annual utility bills are high and a significant portion of your home is used for business, the savings can be meaningful.

Is It Worth Claiming Work From Home Tax Relief in 2025 and Beyond?

As remote work continues to be a standard part of modern employment, it makes sense to take advantage of the tax relief available. While the amount may not be transformative, claiming your entitled deduction is a financially sensible move, especially with increasing energy and cost of living in London.

Additionally, the process is becoming more streamlined, with HMRC updating its systems to make online claims easier. For those self-employed, optimising your allowable expenses is a key part of managing your business finances efficiently.

Conclusion

Claiming a work from home tax deduction in the UK can lead to meaningful savings, whether you’re employed or self-employed. Understanding HMRC rules, choosing the right claim method, and keeping accurate records are key. As remote work continues into 2025 and beyond, taking advantage of available tax relief is both practical and financially beneficial.

FAQs

Can I claim internet costs for working from home?

Yes, if part of your internet use is directly related to work. You’ll need to calculate and claim only the business-use portion.

Is office furniture a claimable expense?

Self-employed individuals can claim for items like desks and chairs, while employees may only claim if the furniture is essential and not reimbursed.

Can I backdate a work from home tax claim?

You can backdate claims for up to four tax years if you were eligible but didn’t claim at the time.

Do I need receipts for the simplified method?

No. The flat-rate simplified method doesn’t require evidence, but the actual cost method does.

Can I claim a portion of my rent?

Self-employed workers may claim a percentage of rent based on business use, but employees generally cannot.

What if I work from home only part-time?

You may still be able to claim, but the relief will be adjusted based on hours worked and whether your employer required you to work from home.

Is HMRC strict about home office claims?

Yes, especially for actual cost claims. Accurate records and fair usage estimates are crucial to avoid penalties.