How to Claim Working from Home Tax Relief

If you work from home, you may be able to claim tax relief for some of the bills you have to pay. However, the rules changed significantly after the pandemic, and eligibility is now much stricter for employees.

Rules for Employees (PAYE)

If you are employed, you can only claim working from home tax relief if your employer requires you to work from home. You cannot claim if you simply choose to work from home, or if your employer has an office but allows hybrid working.

You can claim if:

• Your employer does not have an office.
• Your job requires you to live far away from your employer's office.
• There are no appropriate facilities available for you to perform your job on your employer's premises.

What Can Employees Claim?

If you are eligible, you can claim tax relief on the additional costs of working from home, such as heating, metered water bills, and business phone calls. You cannot claim for things you would pay for anyway, like rent, mortgage interest, or broadband access.

You have two options for claiming:

1. The Flat Rate: You can claim a flat rate of £6 a week (or £26 a month). You do not need to keep receipts or prove your exact costs to claim this amount.
2. Actual Costs: You can claim the exact amount of extra costs you've incurred, but you will need receipts, bills, or contracts to prove it.

To claim, you can use the online portal on the gov.uk website. If your claim is successful, HMRC will usually adjust your tax code so you pay less tax.

Rules for the Self-Employed (Sole Traders)

If you are self-employed, the rules are much more flexible. You can claim a proportion of your household running costs as a business expense, reducing your taxable profit.

Simplified Expenses

The easiest way to claim is using 'simplified expenses'. This is a flat rate based on the number of hours you work from home each month:

• 25 to 50 hours: £10 per month
• 51 to 100 hours: £18 per month
• 101 and more hours: £26 per month

Calculating Actual Costs

Alternatively, you can calculate the actual business proportion of your home bills. You add up your total household expenses (rent/mortgage interest, council tax, heating, electricity, internet) and divide them by the number of rooms you use for business, and the amount of time you use them.

For example, if you have 5 rooms in your house, and you use 1 room as an office for 90% of the time, you can claim 90% of 1/5th of your total household bills.

You claim these expenses on your annual Self Assessment tax return.