Answers · UK 2025/26
How does the home office deduction work for the self-employed in the UK for 2026/27?
Self-employed individuals working from home can either use HMRC's simplified flat rate (£10, £18, or £26 per month based on hours worked from home) or calculate actual costs (proportional share of rent/mortgage interest, utilities, broadband, council tax). The flat rate is easier; actual costs require detailed records and apportionment. You cannot claim the entire mortgage interest -- only the business portion.
Full answer
Self-employed individuals who work from home can claim a deduction for home office costs against their trading profits, reducing Income Tax and Class 4 NI. There are two methods. **Method 1 -- HMRC simplified expenses (flat rate):** | Monthly hours of home working | Flat rate per month | |---|---| | 25-50 hours | £10 | | 51-100 hours | £18 | | 101+ hours | £26 | This is the simplest approach -- no receipts or apportionment needed. Based on 101+ hours at home, the maximum deduction is £312 per year. **Method 2 -- Actual costs (proportion of household bills):** You apportion your household costs between business and personal use. Common approaches: - Room-based: (number of rooms used exclusively for work / total rooms) x annual costs - Time-based: (hours used for business / total hours in the year) x proportion of the house - Area-based: (floor area of work room / total floor area) x annual costs **Costs you can include:** - Heating and electricity (proportional to business use) - Broadband (if used for business) - Council tax (proportional) - Rent (proportional) - Mortgage interest -- proportional amount, NOT capital repayments (and be aware that using a room "exclusively" for business can trigger a CGT charge on Private Residence Relief on that portion when you sell your home) **Important distinction -- exclusive use:** If a room is used ONLY for business (a dedicated office), you can claim the full proportional cost. If the room is dual-use (dining table used as desk during the day), you can still claim a time-based proportion but the apportionment must be defensible. **Capital Gains Tax risk:** Claiming a portion of the house as a business asset can reduce the Private Residence Relief on your eventual house sale, creating a CGT liability on that fraction. Most self-employed people therefore avoid claiming exclusive business use of any part of their home and use the time/use-based approach instead.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.