Working From Home: Actual Costs vs GBP 6/Week 2026/27

The Two Methods HMRC Allows

If you work from home -- whether as an employee or self-employed -- HMRC offers two routes to claim tax relief on the extra costs you incur. The first is the flat rate: a fixed amount per week that you claim without any supporting receipts. The second is the actual costs method: you calculate the real additional expenses you incur and claim a proportionate business share.

Which is better depends on your home, the size of your workspace, your utility bills, and whether you are employed or self-employed. This guide walks through both methods for 2026/27 with real numbers so you can decide which applies to you.

Use the CalcHub Income Tax Calculator alongside this guide to model the after-tax saving for your specific tax rate.

Method 1 -- The Flat Rate (GBP 6 Per Week)

HMRC introduced a simplified flat rate specifically for employees who work from home under a homeworking arrangement agreed with their employer. The current approved amounts are:

• GBP 6 per week (GBP 312 per year)
• GBP 26 per month (GBP 312 per year)

You cannot mix the two -- pick one basis for the whole tax year. The flat rate covers the notional cost of heating, lighting, and broadband you use while working at home. You do not need to show receipts, and you do not need to apportion anything. HMRC accepts the claim automatically.

To claim as an employee, you either:

1. Submit a P87 form online via your HMRC Personal Tax Account, or
2. Ask your employer to put the relief through payroll via a PAYE dispensation

The saving in real money depends on your tax band. For 2026/27:

• Basic-rate taxpayer (20%): GBP 312 x 20% = GBP 62.40 per year
• Higher-rate taxpayer (40%): GBP 312 x 40% = GBP 124.80 per year
• Additional-rate taxpayer (45%): GBP 312 x 45% = GBP 140.40 per year

For many employees who share a kitchen table or a spare room, the flat rate is the pragmatic choice. No paperwork, instant approval, and a guaranteed saving.

Method 2 -- Actual Costs

The actual costs method lets you claim a proportion of your genuine household outgoings. It is more effort but can produce a significantly larger deduction if you have a dedicated workspace and substantial bills.

The costs you can include are:

• Heating (gas and electricity for your workspace)
• Electricity (lighting and equipment power)
• Broadband (the business proportion)
• Rent (the business-use proportion of your rental payment)
• Mortgage interest -- not capital repayment -- (employees only on a partial basis; see caveats below)
• Council tax (the business proportion)
• Home insurance (the business proportion)

Costs you cannot include:

• Capital repayment on a mortgage
• Food and drink
• Personal phone calls (only the business proportion of line rental and calls)

How to Calculate the Apportionment

The standard approach is a two-step formula:

Step 1 -- Floor area ratio: Measure (or estimate) the floor area of your workspace as a percentage of the total usable floor area of your home.

Step 2 -- Time ratio: Estimate the proportion of time the workspace is used for business versus personal purposes. A room used only for work scores 100%; a spare bedroom used as an office five days a week but as a guest room at weekends might score 70%.

Multiply the two percentages together to get your overall business fraction.

Example: Your home is 80 square metres. Your office is 8 square metres -- 10% of the total. You use the office for work Monday to Friday but occasionally in evenings for personal projects, so you assess business use at 70%. Overall fraction: 10% x 70% = 7%.

Your annual household bills:

• Gas: GBP 1,800
• Electricity: GBP 1,200
• Broadband: GBP 600
• Council tax: GBP 2,000
• Home insurance: GBP 400
• Rent: GBP 12,000
• Total: GBP 18,000

Business deduction: GBP 18,000 x 7% = GBP 1,260 per year.

Saving for a basic-rate taxpayer: GBP 252. Saving for a higher-rate taxpayer: GBP 504.

Compare that with the GBP 62.40 or GBP 124.80 you get from the flat rate. The actual costs method wins comfortably if your bills are representative of a typical UK household and you have a dedicated workspace.

Flat Rate vs Actual Costs -- Which Is Better?

Here is a quick comparison using 2026/27 figures:

Actual costs is almost always better if you have a room of your own and are renting a large property or running high energy bills. The flat rate wins only when your workspace is genuinely shared and casual, or when the administrative burden of tracking costs outweighs the marginal gain.

For higher-rate taxpayers, the numbers double. A higher earner with 10% floor area and GBP 20,000 bills saves GBP 640 with actual costs versus GBP 125 with the flat rate.

The Mortgage Interest Caveat

Employees can include mortgage interest in an actual-costs claim, but there is an important tax risk to understand. If you designate part of your home as exclusively and necessarily used for your employment, you may be denying yourself private residence relief (PRR) on that fraction when you sell.

PRR normally exempts any gain on your main home from capital gains tax entirely. But if you have claimed a room is exclusively business, HMRC can argue that fraction was never your residence and a proportionate share of any gain on sale is chargeable to CGT. Given that CGT on residential property is now charged at 18% (basic rate) or 24% (higher rate) from 2024, the long-term CGT cost could easily dwarf years of income tax savings.

In practice, most employees avoid this problem because HMRC only challenges exclusivity where use is genuinely exclusive and permanent. If you also use your office for personal admin, online shopping, or family use even occasionally, it fails the exclusivity test -- meaning you cannot claim exclusive use, but by the same token you face no PRR risk.

The safest approach for employees is to exclude the mortgage-interest element from actual costs and claim all other bills. The saving is still material and there is no CGT exposure.

Self-employed workers face a slightly different set of rules -- they can use simplified expenses (a different flat rate based on hours) or actual costs, but are generally more exposed to the exclusivity/PRR risk if they claim any capital element.

Self-Employed Workers -- A Different Flat Rate

Self-employed people cannot use the employee GBP 6/week flat rate. Instead, HMRC offers simplified expenses for the self-employed based on hours worked from home per month:

• 25-50 hours: GBP 10/month
• 51-100 hours: GBP 18/month
• 101+ hours: GBP 26/month

These rates are very low -- GBP 312/year maximum for someone working full-time from home. Most self-employed workers who have a dedicated office will save more using actual costs. Track your bills, measure your space, and keep a log of business hours to support the claim.

If you use accounting software or file self-assessment yourself, run both calculations before choosing. The CalcHub Self-Employed Tax Calculator can help you see how your home-office deduction affects your final tax bill.

How to Claim in Practice

Employees on PAYE: If you are not already claiming, log into your HMRC Personal Tax Account at gov.uk and complete a P87 claim. You can claim for the current year and up to four previous tax years. If you are already in self-assessment, include the working-from-home expense on your tax return in the employment section.

Self-employed in self-assessment: Enter your home-office expense (actual costs or simplified expenses) on the self-employment pages of your tax return under allowable expenses. Keep a record of how you calculated the figure for at least five years in case HMRC enquires.

Record keeping for actual costs: You do not need to submit bills with your return, but keep them on file. A simple spreadsheet showing each bill, the amount, the floor-area percentage, the time percentage, and the resulting deduction is sufficient. HMRC expects to see your workings if they query the claim.

Checking Whether Your Employer Already Pays a Contribution

Before claiming anything, check whether your employer already pays you a working-from-home allowance. Many employers now pay GBP 6/week or more as a non-taxable reimbursement under the HMRC exemption. If your employer already pays GBP 6/week, you cannot also claim the tax relief -- you would be getting the benefit twice. If your employer pays less than GBP 6/week, you can claim the difference as tax relief.

Always cross-check your payslip notes and any homeworking policies before filing a claim. Overstated relief claims can trigger an HMRC enquiry and a penalty if you are careless.