Claiming Use of Home as Office — A Trade Business Guide (2026)

What "Use of Home as Office" Actually Covers

You do not need a dedicated, formal office to claim. HMRC accepts that running a business involves administrative work done at home. For a typical trade business that includes:

• Preparing and sending quotes and estimates
• Raising invoices and chasing late payment
• Bookkeeping, VAT returns and Self Assessment
• Ordering materials and dealing with suppliers
• Answering customer calls, emails and enquiries
• Storing tools, plant, stock and business records at home

The key point for trades is this: it does not matter that your billable work happens on someone else's property. If your business is administered and run from home, you are using your home for business and a proportion of the cost of keeping that home running is an allowable expense. The question is only ever how much you can claim — and that depends on which method you use.

Method 1 — HMRC Simplified Expenses (Flat Rate)

If you are a sole trader or in a partnership, the simplest approach is HMRC's simplified expenses flat rate. You count the number of hours you spend working from home each month on business admin, and claim a fixed monthly amount based on which band you fall into. There are no receipts to keep for the household bills and no apportionment calculation — you just log the hours.

The flat rate covers heating, electricity and other household running costs. It does not cover your business phone or broadband used for work — you can claim the business proportion of those separately on top of the flat rate. The trade-off is simplicity for size: the flat rate is usually lower than what you could claim under the actual-cost method, but it removes almost all the admin and the risk of getting an apportionment wrong.

The flat rate only applies where you work 25 or more hours a month from home. If you do less than that, use the actual-cost method instead.

Method 2 — Actual Costs (Apportionment)

The actual-cost method works out a reasonable proportion of your real household running costs. It takes more record-keeping but, for many trade business owners who genuinely run the business from home and store stock and tools there, it produces a larger and more accurate claim. The costs you can include a proportion of are:

• Mortgage interest — the interest element only, never the capital repayment
• Rent — if you rent your home
• Council tax
• Gas and electricity
• Water — only if business use materially affects consumption; otherwise it is usually excluded
• Home insurance — buildings and contents proportion
• Broadband and landline — business proportion
• Mobile phone — business proportion of the bill
• Repairs and maintenance relating to the part of the home used for business

You then apportion these costs on a reasonable basis. The standard method is to split by the number of rooms in the house and the proportion of time each room is used for business.

How the Apportionment Works

Take your total annual running costs, divide by the number of rooms used (excluding kitchens, bathrooms and hallways from the count), then adjust for the proportion of time the room is used for business rather than personal use. So a room used as an office for the business 50% of the time gives you half of that room's share of the costs.

This time-and-space split is what keeps your claim defensible. Claiming a full room's costs 100% of the time is rarely realistic for a trade business owner who is out on site most of the day — and, as you will see below, claiming a room is used exclusively for business creates a Capital Gains Tax problem you do not want.

A Worked Example

Say you are a sole trader electrician working from a four-bedroom house. You use one room as a home office for quoting, invoicing and admin, and you store stock and tools in the garage. Counting the rooms that could be used as living space, you have six rooms (excluding kitchen, bathrooms and hall). Your annual household costs that qualify are:

• Mortgage interest: £3,600
• Council tax: £2,100
• Gas and electricity: £1,800
• Home insurance: £400
• Total: £7,900

Divide £7,900 by 6 rooms = £1,317 per room per year. You use one room as an office. If you use it for business 60% of the time (the rest being personal use such as a study or guest space), your claim for that room is £1,317 × 60% = £790. You would add a reasonable proportion for the garage storage and the business share of your broadband and mobile on top. Compare that to the simplified flat rate of £26 a month = £312 a year, and you can see why the actual-cost method often wins for a genuine home-run trade business — provided you keep the records to back it up.

Sole Trader vs Limited Company — The Rules Differ

The two methods above apply to sole traders and partnerships. If you trade through a limited company, the picture is different because you are an employee and director of that company, not the same legal entity as the business.

The £6 a Week Allowance

A company director or employee who works from home can claim a flat £6 per week (£312 a year) for additional household costs without needing receipts or evidence. The company pays this to you free of tax and National Insurance, and claims it as a business expense. It is the simplest route and suits directors whose home use is modest.

Charging Rent to Your Company

If your home use is significant, a director can instead charge the company rent for using part of the home, under a formal licence agreement between you and the company. The company gets a deduction for the rent, and you declare the rental income on your Self Assessment — but you can offset a proportion of your home running costs against that income, so the net effect can be tax-efficient. The agreement must be properly drawn up, the rent must be commercially reasonable, and you should take advice before setting this up because of the Capital Gains Tax point below. Done incorrectly, charging rent can do more harm than good.

The Capital Gains Tax Trap

This is the single most important thing to get right. Your main home is normally exempt from Capital Gains Tax when you sell it, thanks to Private Residence Relief. But if any part of your home is used exclusively for business, that part loses its relief — and a slice of any gain when you sell becomes taxable.

The fix is simple: never use a room 100% exclusively for business. Make sure any room you claim for also has some genuine personal use — a desk in a room that doubles as a study, guest room or family space. As long as the room is not used solely for business, full Private Residence Relief is preserved and your expense claim is unaffected. This is exactly why the time-apportionment in the actual-cost method matters: claiming 60% business use of a dual-purpose room is both more defensible and protects your CGT position, whereas claiming a dedicated office used only for work invites a future tax bill.

Record-Keeping

Whichever method you choose, keep evidence that supports the claim. HMRC can ask you to justify it years later, and a claim you cannot back up is a claim that gets disallowed.

• Flat rate: keep a simple log of the hours you work from home each month so you can prove which band you fall into.
• Actual cost: keep your annual bills — mortgage interest statement, council tax, energy, water, insurance, broadband and phone — plus a note of your apportionment basis (number of rooms, business-use percentage and how you arrived at it).
• Note any licence agreement and rent calculation if you charge rent to your company.
• Keep records for at least the period HMRC requires — generally five years after the Self Assessment filing deadline for the relevant year.

Good job-management software that already captures your quotes, invoices and costs makes this far easier, because the time you spend on admin and the running of the business is visible and evidenced rather than reconstructed from memory at year end.

Which Method Should You Use?

For most trade business owners it comes down to how much you genuinely do from home and how much admin you are willing to keep:

• Sole trader, light home use: the simplified flat rate (£10/£18/£26 a month) is quick, safe and almost effort-free.
• Sole trader running the whole business from home, storing stock and tools: the actual-cost method usually produces a bigger, fully justified claim if you keep the records.
• Limited company director, modest use: the £6 a week allowance is the easy default.
• Limited company director, significant use: consider a rental licence agreement, but take advice first.

You can compare both self-employed methods each year and use whichever gives the better result — you are not locked in. If in doubt, run the actual-cost calculation once; if it comes out well above the flat rate and you have the records, it is worth the extra effort.