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If you work from home, it can be hard to know which extra household costs qualify for tax relief and how to claim them cheaply and correctly. This guide walks through what counts as home office expenses, flat‑rate versus actual costs, P87 claims and record‑keeping.
Home office expenses are the extra costs you face because you work at home instead of in a workplace provided by an employer or for your business. For employees this usually means additional heating, electricity, metered water and business phone or broadband costs that arise only because of homeworking. For self‑employed people, a reasonable share of rent, mortgage interest, council tax and other running costs can sometimes be treated as business expenses, using methods such as floor area or hours worked. Only the work‑related part of any expense is relevant and normal personal living costs remain non‑deductible.
Who can claim tax relief for homeworking depends on how and why you work from home. Employees normally need homeworking to be required by their employer and must meet conditions in tax rules; occasional or purely voluntary working from home is less likely to qualify, and the temporary flat rate relief introduced during the pandemic has ended. Hybrid workers who split time between home and the office need to show that homeworking is a formal and necessary part of their role, not just a convenience. Self‑employed people generally have wider scope but must apportion costs on a reasonable basis or use the official simplified flat rate and keep records in case HM Revenue and Customs asks for evidence.
There are three main ways to calculate home office expenses, and the best option depends on how you work and the records you keep. Employees taxed under PAYE usually rely on homeworking tax relief, which allows a small fixed weekly amount without showing detailed bills. People who are self‑employed or run a business from home can instead use the simplified expenses flat rate, or claim a proportion of their actual household running costs, such as gas, electricity and metered water, where this gives a fairer reflection of business use.
Flat rate methods are designed to be quick and predictable. Under employment rules, if you are required to work from home you can normally claim a standard allowance towards extra household costs without proving the precise increase. The simplified expenses rules for the self‑employed use a fixed monthly amount based on hours worked at home. Both approaches avoid having to split every bill between personal and business use, which can be useful when usage varies or detailed measurement would be impractical.
Claiming actual costs usually needs more record‑keeping but can be more accurate if working from home has a clear impact on your bills. You identify allowable running costs and apportion them on a reasonable basis, for example by floor area or number of rooms used for work. You cannot normally claim rent or mortgage capital, and you should keep evidence of payments and the way you split them. In practice, those with modest home office expenses often use a flat rate, while people who work mainly from home or have higher costs may consider a carefully supported actual‑cost calculation.
| Method | Complexity & Records | Accuracy of Costs | Typical Working Pattern | When It Is Usually Preferred |
|---|---|---|---|---|
| Employee homeworking flat rate | Low complexity, minimal records | Low to medium accuracy | Occasional homeworking | When costs are modest and simplicity is priority |
| Simplified expenses flat rate | Low to medium records, track hours only | Medium accuracy | Regular but variable homeworking | When self‑employed want predictable claims |
| Actual household running costs | Higher complexity, detailed records | Higher accuracy | Mostly working from home | When bills are significantly affected by homeworking |
| Mixed or changing methods over time | Medium complexity, compare approaches | Balanced accuracy | Shifting homeworking pattern | When reviewing which method remains suitable |
The flat rate approach uses HMRC’s simplified expenses for working from home, based on hours rather than detailed bills. It keeps admin and record‑keeping light, so it often suits employees or small businesses who work at home part‑time, have modest home office costs, or simply want the cheapest way in time and effort to support a claim.
Claiming actual costs can give higher tax relief where home running expenses are substantial or you work at home most of the time. You need to calculate a reasonable business share of bills, decide which costs are allowable, and keep receipts and other evidence in case HMRC queries the claim. This more complex method is usually only worthwhile if you are comfortable with careful records.
Employees who pay tax through PAYE can claim tax relief for homeworking only where the employer requires work to be done at home and does not fully reimburse the extra costs. The usual routes are a P87 claim, made online or on paper, or including the expenses in a Self Assessment tax return. P87 is generally used by those who are not already in Self Assessment and whose employment expenses, including home office costs, are relatively small. If you file a tax return, the claim is made in the employment section instead of submitting a separate P87.
Whichever route you use, you must restrict the claim to allowable employment expenses. For working from home this normally means the extra part of household costs such as additional gas, electricity, metered water and business phone calls, rather than fixed costs like rent or council tax. You may be able to use a flat rate homeworking allowance where conditions are met, or in some cases claim the actual additional costs you can demonstrate arose because you had to work at home. Claims can often be backdated, but only for tax years that are still open and only where a homeworking requirement applied.
HMRC usually processes P87 and Self Assessment expense claims within normal timescales, but repayments may take longer if information is incomplete, figures look unusual for your income level or HMRC asks for more evidence. Keeping notes of how many weeks you were required to work at home and how you calculated your extra costs can assist if HMRC queries the claim. It is sensible to keep bills, calculations and any employer correspondence about homeworking, even when using a flat rate, so you can support your position if the claim is reviewed.
If you claim home office expenses based on actual costs, HMRC generally expects evidence such as utility bills, invoices or contracts showing amounts and dates. When you use an employer homeworking allowance or the simplified flat rate, detailed receipts are less important, but you should still keep notes of how you calculated the claim, your homeworking pattern and any agreement with your employer. Keeping records for the usual enquiry window helps show that the costs relate to your employment rather than general household spending.
Claims for earlier tax years are restricted by statutory deadlines, so you can normally only backdate working from home tax relief for a limited period and should check the cut‑off dates. HMRC refunds from P87 or online claims can be delayed, especially in busy periods or if officers need more information, so it is helpful to ensure your figures align with payslips and tax codes and to reply quickly to any requests for clarification or supporting documents.
For most employees, claiming working from home tax relief is simple enough to do without an accountant. If you only need the standard homeworking allowance or straightforward running costs, the online claim process or the paper P87 form are designed for non‑specialists and explained in HMRC guidance. Handling the claim yourself avoids professional fees and is usually the cheapest option where the expected tax saving is modest. The main risks are using the wrong figures, misunderstanding eligibility or including costs that are not allowable, which can slow down repayment or trigger HMRC questions. Reading the official notes and keeping basic records of your working pattern and expenses is normally sufficient for a routine claim.
Paying for professional advice tends to be more useful when your situation is more complicated, such as hybrid working patterns, mixed flat‑rate and actual household costs, or interactions with other reliefs and benefits. An accountant can help you choose between simplified homeworking expenses and detailed apportionment, check that you meet the conditions and keep claims consistent from year to year. However, fees may easily exceed the tax relief from a small home office claim, so it is sensible to ask about charges in advance and consider whether they will review your wider tax position rather than only submit a single working from home claim.
What counts as home office expenses for an employee?
Usually only extra costs because you have to work from home: additional heating, electricity, metered water and business‑related phone or broadband. Normal household costs stay non‑deductible.
Can I claim working from home tax relief using a P87 form?
Yes, if you are taxed under PAYE, required to work at home by your employer, and your employment expenses are relatively small. Otherwise you claim through your Self Assessment tax return.
Do I need receipts for home office expenses?
For actual cost claims HMRC expects evidence such as utility bills and phone contracts. For the flat weekly allowance or simplified expenses, keep notes of your hours and how you worked out the claim.
Is it better to use flat rate or actual costs for home office claims?
Flat rate methods keep admin light and suit modest or part‑time homeworking. Actual costs can give higher relief when you have significant business use and good records of household bills.
Should I claim tax back myself or use an accountant for home office expenses?
Most employees can claim themselves online or with form P87, which is usually cheaper. An accountant may help if your situation is complex or you are already in Self Assessment.