Relief for homeworking expenses post covid-19

Since the pandemic accelerated remote working into the mainstream, many of us have made permanent adjustments to where we work. Whether you’ve converted a spare room into an office or you’re hot-desking from the kitchen table, the good news is that HMRC recognises homeworking expenses as legitimate business costs. The challenge is understanding which expenses qualify and how to claim them correctly. Let’s walk through what you need to know to maximise your tax relief in 2024/25.

Understanding homeworking relief under HMRC rules

HMRC permits self-employed individuals and employees to claim tax relief on expenses incurred “wholly and exclusively” for business purposes. For homeworking, this means costs that are directly attributable to running your business from home.

The critical word here is “exclusively.” You can’t claim relief for the entire cost of your broadband or council tax simply because you use your home to work—HMRC will ask you to apportion expenses fairly between personal and business use.

The most straightforward approach is HMRC’s simplified expenses scheme, which allows self-employed people to claim £26 per week (or £1,248 annually) for homeworking costs without keeping detailed records. This flat-rate relief covers things like rent, Council Tax, utilities, and internet. If you’re claiming more than this, you’ll need to justify specific expenses with proper records.

What expenses qualify?

Beyond the simplified scheme, there are several homeworking costs you can claim:

Utility bills and heating – You can claim a proportion of these costs. For instance, if your dedicated office space represents 20% of your home, you might reasonably claim 20% of these expenses. Keep records of your bills and a note of how you’ve calculated your claim.

Council Tax and mortgage interest – Again, a proportionate share based on the floor area of your workspace is acceptable. This doesn’t apply to Council Tax for employees, who can only use the simplified scheme.

Internet and telephone – Claim the business proportion. If you share a broadband connection, split the cost between personal and business use based on actual usage.

Equipment and furniture – A desk, office chair, shelving, and lighting are all claimable. Capital allowances rules apply here; items under £1,000 can usually be claimed as consumable items, whilst more expensive equipment may be subject to capital allowances.

Office supplies – Printer ink, stationery, and software subscriptions are straightforward business expenses.

Insurance – Building and contents insurance for your office space may be partly claimable.

Employees vs. self-employed: important differences

Self-employed individuals can use either the simplified scheme or claim actual expenses with supporting documentation. You’ll report this via your Self Assessment tax return. The flexibility here is valuable—if your actual costs exceed £1,248 annually, it’s worth keeping detailed records.

Employees are more restricted. You can only claim relief through the simplified expenses scheme or equivalent arrangements with your employer. You cannot claim a proportion of your mortgage or Council Tax. Instead, your claim is limited to certain expenses like office equipment and internet costs, calculated proportionately.

If your employer has instructed you to work from home and hasn’t covered your costs, you may be eligible for relief. Check with your HR department first—some employers provide allowances or reimburse costs directly, which is neater from a tax perspective.

Keeping records and claiming relief

Whichever route you take, good record-keeping is essential. Keep copies of utility bills, invoices for equipment, and a note of how you’ve apportioned costs between business and personal use.

For the simplified scheme, you simply tick the relevant box on your Self Assessment return—no supporting documentation required (though HMRC may ask to see your working if selected for inspection).

If claiming actual expenses, document everything: receipts, invoices, bank statements, and a calculation showing how you’ve worked out the business proportion. HMRC is reasonable about apportionment, but they expect your working to be transparent and fair.

Final thoughts

Homeworking expenses remain perfectly legitimate, and post-pandemic, HMRC expects claims for these costs. The key is ensuring you’re claiming only the business portion of shared costs and keeping records proportionate to your claim size.

For tailored advice on what you can claim and how to structure your homeworking expense claim effectively for the 2024/25 tax year, contact Severn Accounting—we’re here to help.