Working From Home Tax Relief UK 2026 — How to Claim What You Are Owed

Millions of people in the UK now work from home either full-time or on a hybrid basis. Whether you are employed, self-employed, or a limited company director, there are specific tax reliefs available for working from home — but the rules differ significantly depending on your employment status, and many people are claiming the wrong amount or nothing at all.

This guide covers every working from home tax relief available in 2026, explains how to calculate and claim each one, and highlights the rule changes that affect directors from April 2026.

Employed Workers — The Employer Payment Route

If your employer asks you to work from home, they can pay you a tax-free allowance to cover the additional costs you incur. In 2026/27, the approved rate is:

£6 per week (£312 per year) — paid with no receipts or calculations required.

This payment is completely tax-free to you and is a deductible expense for the employer. If your employer does not currently pay this and you work from home regularly by requirement, ask your payroll or HR department to set it up. It is a simple, low-cost benefit that many employers overlook.

If your actual additional costs are higher than £6 per week, your employer can pay the higher amount tax-free, but receipts and calculations are required to support the excess.

Sole Traders — Flat Rate vs Actual Costs

If you are self-employed and work from home, you can claim a deduction against your trading income for the business use of your home. You have two methods:

Method 1 — Simplified flat rate (no receipts needed):

No receipts or calculations required. Simply record your working hours and claim the appropriate flat rate. Maximum annual claim: £312.

Method 2 — Actual costs method:

Calculate the proportion of your home running costs attributable to business use. The typical approach is to apportion by:

• Number of rooms used for business as a proportion of total rooms, AND
• Hours of business use as a proportion of total hours the room is used

Applicable costs include: electricity, gas, water rates, council tax, mortgage interest or rent, and broadband.

This method often produces a significantly higher deduction — particularly for people who work from home full-time and have substantial energy costs. However, claiming a proportion of mortgage interest using this method can affect CGT Principal Private Residence relief when you eventually sell.

Limited Company Directors — Equipment and Employer Payments

The most tax-efficient working from home approach for limited company directors is a combination of:

1. Employer payment of £6 per week: The company pays you £312 per year as a working from home contribution. Tax-free to you, deductible for the company. Set up through payroll.

2. Reimbursement of actual additional costs: Where your actual additional costs (energy, broadband upgrade) exceed £6 per week, the company can reimburse the documented excess. Keep utility bills and a clear calculation.

3. Company purchase of home office equipment: A desk, chair, monitor, laptop, webcam, keyboard, printer — all purchased by the company and used for business — are company assets claimed through capital allowances. No personal tax charge on items that are primarily for business use. This is often the largest single saving available to working-from-home directors.

What a director cannot do is have the company pay their rent or mortgage — these are personal expenses and would create a Benefit in Kind charge.

Equipment — How the Annual Investment Allowance Works

For both sole traders and limited companies, equipment purchased for business use is claimed through capital allowances. The Annual Investment Allowance (AIA) allows 100% of the cost to be deducted in the year of purchase, rather than over several years.

This means a £1,500 desk and chair set, a £800 monitor, and a £1,200 laptop purchased in 2026/27 can all be deducted in full this year, reducing taxable profit by £3,500 immediately.

For a basic rate sole trader, £3,500 in capital allowances saves approximately £700 in income tax. For a limited company, it saves £665 in Corporation Tax.

Broadband and Phone

If you upgraded your broadband specifically because of home working, the additional cost above what you would otherwise have paid is a legitimate business expense.

For your mobile phone, claim the business use proportion. If you use your phone 70% for business, claim 70% of the contract cost. A limited company can have a phone contract in the company name, which makes the full cost deductible and creates no Benefit in Kind.

Frequently Asked Questions