Working From Home Expenses for Company Directors

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Last updated 23 October 2026. Written by the Limited Company Accountant UK team, part of Accotax. Figures are for the 2026/27 tax year; always check GOV.UK for the latest rates.

Short answer: A director working from home can claim either the simplified flat rate of £6 per week, or a fair proportion of actual household costs such as heating, electricity and broadband. The company pays you the allowance tax-free if it reflects genuine business use, and records the payment as an expense.

Key facts

Flat rate	£6 per week, no receipts needed
Actual costs	Proportion of utilities, broadband and similar
Rent or mortgage	Be careful, may affect home relief
Paid by	Company reimburses the director
Records	Calculation and bills for 6 years

Why directors claim home working costs

Millions of limited company directors run their business from a spare room or a kitchen table. When you work from home, part of your household bills exists because of the business: the extra heating in the winter, the electricity running your computer, and the broadband you need for client calls. HMRC accepts that the company can reimburse you for the business share of these costs.

The company reimburses you, and the payment is a deductible expense. The reimbursement is not taxed on you, provided it is a fair amount that reflects actual use. Used correctly, it reduces company profit and puts a little money into your pocket tax-free.

Method one: the simplified flat rate

The easiest way is the simplified flat rate, which lets you claim £6 per week, or £26 a month, for time worked at home without keeping receipts. The flat rate covers the extra costs of heating, lighting and power, but not broadband, which can be claimed separately for the business proportion.

It suits directors with a straightforward set-up, who work at home for a significant part of the week. The company pays you £312 for a full year, and your accountant records it as an expense. If you work from home for only some months, claim for the weeks you actually worked there.

Method two: a proportion of actual costs

If your actual costs are higher, you can claim a fair proportion of them instead. You will need your bills for heating, electricity, water, council tax if relevant, broadband and telephone, plus an apportionment method. A common approach divides costs by the number of rooms in the house and the time the room is used for work.

For example, if a home has six rooms, one is used solely as an office, and you work in it 40 hours a week, you might claim one sixth of heating and electricity bills, adjusted for time. Keep the calculation, as HMRC may ask to see it. The result is often higher than £6 a week, but it requires more paperwork.

What about rent, mortgage and council tax?

The question of claiming part of your rent or mortgage is more delicate. If you rent, a proportion of the rent can be claimed if a part of the property is used exclusively for the business. If you own, the capital part of the mortgage is never allowable, and claiming a share of mortgage interest or council tax may affect private residence relief when you sell the home.

For most directors who simply work from a spare room, the safest approach is to claim utilities and broadband, not rent or mortgage. If you do claim a larger share of the property, take advice about the capital gains tax position first.

Having a formal rental agreement

Some directors charge the company a rent for using a room at home. The company can then pay a market rent, deduct it, and you declare the rent as income on your Self Assessment return. The effect is rarely beneficial, because you pay tax on the rental income, and it can create other complications, such as losing the lodger or rent-a-room relief if you cross certain limits.

For most small companies, a straightforward reimbursement of business costs is simpler and more tax-efficient than a rent agreement.

Common mistakes

Typical errors include claiming the full bill for a household utility when it is shared, using the flat rate and actual costs together for the same period, paying the allowance without recording it in the books, and claiming for weeks you did not work at home.

Another is not telling your accountant. If the company pays you a home working allowance without a record, it can look like a personal withdrawal and end up in your director’s loan account, with consequences if the account is overdrawn at year end.

How to set it up

Decide which method suits you, and record the decision. Each month, or each quarter, the company pays the agreed amount to you and logs it as a home working expense. Keep a note of the method, any supporting bills, and the number of weeks you worked at home.

At year end, your accountant checks the total, makes sure it is reasonable, and includes it in the accounts. If your circumstances change, such as moving to an office, tell your accountant so the claim can stop.

A worked example

Imagine a director who works from home four days a week. Using the flat rate, the company pays £6 a week for 46 working weeks, which is £276, and the company records it as an expense. At 19% Corporation Tax, that saves the company £52, and the director receives £276 tax-free.

Using actual costs, suppose the household heating and electricity cost £2,400 a year, and a quarter of the home use and time can be attributed to the business, giving £600. Add £360 of broadband used 75% for business, which gives £270. The total claim is £870, well above the flat rate. The extra £594 of tax-free income is worth having, but only if you keep the bills and the calculation to support it.

Home working and other tax reliefs

Home working claims interact with other reliefs. If you take on staff who also work from home, the company may reimburse their reasonable costs under the employee homeworking rules. If you add a business room extension, the cost is capital, not revenue, and you will need to think about the effect on your home’s capital gains position.

For most directors, a simple, well-documented claim of £6 a week or a modest proportion of utilities is the safest and fastest route, and it is accepted by HMRC without a fuss.

Checklist for a clean home working claim

Before you ask the company to pay a home working allowance, run through a short checklist. Decide whether you will use the flat rate or actual costs, and use only one method in a given period. Record the number of weeks you worked from home, keep any bills if you use actual costs, and make sure the payment is made from the company bank account into your personal account. Then tell your accountant, so the payment is coded as an expense, not drawings.

Frequently asked questions

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