Working from Home Expenses 2026/27 — Employee & Self-Employed Rules

Working from home has different rules for employees and the self-employed. In 2026/27, an employer may pay an eligible employee up to £6 a week (£26 a month) tax-free for reasonable additional household costs. Employees can no longer claim a deduction from HMRC for unreimbursed homeworking costs for the 2026/27 tax year, although eligible claims for the previous four tax years remain possible. The self-employed can still use actual household costs or HMRC’s simplified flat rates. See the wider take-home position with the Salary Calculator→.

This guide covers the two employee routes, the self-employed simplified and actual-cost methods, what counts as business use of your home, and the records you need to keep.

The 2026/27 Rates at a Glance

The employee figures are no longer two equivalent routes for 2026/27: an employer can still pay up to £6 a week tax-free where the conditions are met, but the employee deduction for unreimbursed costs has been removed for the current tax year. The self-employed flat rates scale with qualifying hours worked from home, topping out at £26 a month. The self-employed can also compare those rates with a reasonable proportion of actual household costs.

How Much Tax You Save

An employer’s £6 weekly payment is not a £312 employee tax deduction: it is an exempt reimbursement or allowance when the conditions are met. The self-employed flat-rate figures are deductions from taxable profits, so the tax effect depends on the person’s marginal rate and wider calculation. The 2026/27 employee deduction cannot be entered into a tax code claim for the current year.

Employees — Who Qualifies and What You Can Claim

• Required to work from home: this matters for employer reimbursement and for eligible historic employee claims. From 6 April 2026, an employee cannot claim the unreimbursed homeworking deduction for the current tax year even if homeworking is required.
• Contract or policy: an employer should have an agreed regular homeworking arrangement and evidence of reasonable additional costs. A one-off "work from home tomorrow" email is weaker evidence than a contract clause or company policy.
• Actual costs route: an employer can reimburse evidenced reasonable additional costs, such as extra heating, electricity, metered water or business phone calls. The employee cannot claim those unreimbursed costs from HMRC for 2026/27, but the historic rules may apply to earlier years.
• What never qualifies: council tax, mortgage interest or rent, broadband used mainly for personal purposes, and everyday costs like tea and coffee. These are not allowable for employees, whatever the split of your working time.

Self-Employed — Simplified vs Actual Costs

• Simplified method: choose this and you claim a flat monthly rate by hours worked — no receipts, no apportionment, no arguments. It is a per-month figure, so a full year at 101+ hours gives £312.
• Actual costs method: claim a reasonable business proportion of eligible bills — mortgage interest (not capital repayments), rent, council tax, utilities, broadband and insurance can be relevant. Private use must be excluded.
• Apportionment: use a reasonable method such as room count, floor area and time used. Exclusive business use is not a general prerequisite for all self-employed home-cost claims, but it can have other tax consequences.
• Profit and loss: apply the normal rules for allowable expenses and losses; there is no blanket rule that home-office costs cannot create a loss. Check the trading allowance, accounting method and loss-relief rules.

Record Keeping and Common Pitfalls

Keep every document that supports the claim for at least five years after the filing deadline where the Self Assessment record-keeping rules apply — utility bills, council tax statements, mortgage interest statements, broadband and phone bills, plus a note of the apportionment method you used.

The classic errors are easy to avoid: trying to claim the removed employee deduction for 2026/27; confusing an employer’s exempt payment with a tax deduction; including mortgage capital rather than interest; using an unreasonable apportionment; and claiming private broadband or household costs as wholly business. Penalties depend on behaviour, disclosure and circumstances, so 30% is not an automatic outcome.

Choose the route before collecting numbers

First identify whether you are an employee, a sole trader, a partner or a company director. The employee exemption concerns an employer payment for reasonable additional household costs. The self-employed simplified rate is a deduction from trading profits. A company director may be an employee for the homeworking payment, but the company’s reimbursement policy and the evidence for actual additional costs still matter. Do not put an employee allowance and a self-employed flat-rate deduction into the same calculation.

For an employee, ask the employer whether the homeworking arrangement is regular and whether the payment is made under the exemption. The £6 weekly figure is the maximum automatic amount, not a compulsory employer payment and not a tax deduction that every hybrid worker can claim from HMRC. If the employer pays less, the employee cannot simply add the difference to a current-year HMRC claim. If the employer pays more, the excess needs evidence and the correct PAYE treatment.

For a self-employed person, compare the simplified method with actual costs for the same accounting period. The flat rate is easy to administer but may be lower than a reasonable actual-cost calculation. Actual costs require bills, a reasonable apportionment and a record of the method. Once you choose a method for a particular expense, changing methods without a clear accounting basis can make the comparison unreliable.

Apportion actual household costs carefully

An actual-cost calculation should explain why the business proportion is reasonable. Room count can be a starting point, but floor area, hours of business use and whether other people use the room can change the result. A room used privately at evenings or weekends is not automatically wholly business use. Broadband and phone costs should be split where there is private use. Mortgage capital repayments are not the same as mortgage interest, and a business-use calculation can have property-tax consequences that a simple calculator does not show.

Keep a short note with the bills: the room or area used, the period, the hours or pattern of business use, the private-use adjustment and the arithmetic. Update it when the business moves, the household changes or the work pattern changes. Do not claim the whole household bill because work takes place at home.

Employer payments and equipment are separate

The homeworking allowance is for reasonable additional household costs. It is not automatically a payment for a desk, chair, computer, broadband package or decoration. Equipment provided by an employer and equipment bought by a self-employed person follow separate benefit or business-expense rules. Keep those invoices separate from gas, electricity, water and business calls.

If an employer supplies equipment, check whether it is provided primarily for work and whether private use is allowed under the relevant exemption. If an employee buys equipment personally, the 2026/27 employee homeworking deduction rules do not automatically make the purchase deductible. Ask the employer about reimbursement before buying expensive equipment.

Worked Examples

Example 1 — Employee receiving employer support. Priya works three days a week from home under an agreed arrangement. Her employer pays £6 a week towards reasonable additional household costs. That is up to £312 of exempt employer support over a full year when the conditions are met; it is not an employee deduction from taxable income.

Example 2 — Self-employed simplified. Tom is a web developer working 35 hours a week from home — about 140 hours a month. That puts him in the 101+ hours band at £26 a month, a £312 deduction worth £124.80 to a 40% taxpayer.

Example 3 — Self-employed actual costs. Rachel uses one room of her five-room house exclusively as an office. Her annual bills are mortgage interest £9,600, council tax £2,000, gas and electricity £1,800, water £600, home insurance £300 and broadband £360 — £14,660 in total. At 20% (one room of five) her deduction is £2,932, saving £1,172.80 at 40%.

Frequently Asked Questions

Check the effect of the relief on your take-home pay with the Salary Calculator→, and read the Sole Trader Expenses guide for the wider range of deductions available to the self-employed.

Official sources

• GOV.UK — Homeworking expenses and benefits exempt from tax
• GOV.UK — Simplified expenses: working from home
• GOV.UK — Expenses if you’re self-employed
• GOV.UK — Tax relief for employees working at home