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This is a freeview 'At a glance' guide to the different rules, for different types of taxpayer in claiming tax relief on the use of their home.

Different rules apply depending on whether you are an employee, self-employed or a director when claiming tax relief against income or profits for the costs of using your home for business purposes. 

	Sole trader	Employee
General rule	May claim all business expenses or if an expense is part-business / part-private may claim an identifiable proportion of that expense. See Working from Home	May only claim expenses if incurred wholly, exclusively and necessarily in performance of employment duties. This excludes expenses that are part-business/part-private. Where home working is undertaken by personal preference no claim is possible. See Employees: Home Working
What type of expenses	Light and heat, mortgage interest, council tax, insurance, utilities, broadband, telephone and other running costs. See What expenses can I claim?	Claims are limited to metered use of light and heat and itemised telephone calls. Claims for other costs may be possible depending on the nature of the employment. See: Employees & expense claims
Instead of claiming actual expenses are there any HMRC approved allowances?	Fixed-rate allowance by hours	£6 per week (£4 to 5 April 2020) or as agreed by employer.
Read more	Working from home (self-employed) Flat (fixed) rate expenses or actual cost toolkit Use of home as office calculator	Working from home (employee) Broadband

 

Top tips and pitfalls 

If an employer reimburses an employee’s expenses under a homeworking agreement there will be no tax liability for the employee provided that the expenses qualify for relief under the general rule. This strategy is more beneficial for the employee because the employer bears all the costs. 

Running your own company?

A company director of an incorporated business may enter into a licence agreement with the company for non-exclusive use of an office in the director’s house. This rental income can then be set against a proportion of the household expenses on the director’s personal tax return. 

See

• Working from home (directors)
• Can I charge my company rent for use of my home?

Pitfalls

• Capital Gains Tax issues to consider where any part of a home is used exclusively for business. 
• You may not claim Rent-a-room relief where a room is rented to a business.
• The Property income allowance is not available where a director or employee charges rent to their employer, 

Useful guides on this topic

Creating an office at home or converting part of a home into an office
Many company owners work from home, this note looks at how you may obtain tax relief on the cost of converting the spare room or building a deluxe summerhouse to serve as an office in the garden.

Adviser's Guide: Property Business: Profits and Losses
Property income derives from the activity of exploiting an interest in a property.

Licence for non-exclusive use of a property
This licence sets out the basic terms for a non-exclusive licence to rent part of a domestic property on a short-term basis.  

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