How to Calculate Your Use of Home Expenses for Your Self‐Assessment

Getting the tax allowable expenses correct on your tax return can feel mind-boggling at times. This blog helps to clarify some of the most common Use of Home expenses you can claim. If you're still struggling at the end of this please drop us an enquiry or book in a Power Hour and we can discuss solutions.

FreeAgent’s guide for sole traders explains in detail which expenses are allowed and how to apportion them. FreeAgent resource. The link to the FreeAgent guide shows very nicely the steps to follow to get the Use of Home Expenses correct. Further explanation is shown below:

What Counts as Use of Home?

If you regularly work from home, you can usually claim a proportion of:

• Utilities: gas, electricity, water

• Broadband and phone line

• Rent or mortgage interest (not repayments)

• Council tax

• Household insurance

• Repairs or cleaning (if they relate to the work area)

Two Ways to Claim

1. Simplified Expenses (Flat Rate Method)

HMRC allows you to use a flat monthly rate based on how many hours you work from home:

Hours per month working from home	Flat rate you can claim
25–50 hours	£10
51–100 hours	£18
101+ hours	£26

This method is quick and easy, but it may not capture the true costs if your bills are high.

2. Actual Costs Method

If you prefer accuracy, you can calculate the exact share of household bills. The formula usually looks like this:

Step 1: Count rooms:

Say you have 5 rooms and use 1 as an office. That’s 1/5 = 20%.

Step 2: Factor in time:

If the room is used for work 8 hours per day, that’s 8/24 ≈ 0.333 of each day.

Step 3: Apply to bills:

If your annual electricity bill is £900:

£900×20%×0.333=£60£900 \times 20\% \times 0.333 = £60£900×20%×0.333=£60

You’d claim £60 of electricity as a business expense.

Repeat this process (probably in a spreadsheet!) for each bill to build up your claim.

Tips for Accuracy

• Keep utility and council tax bills handy to support your figures.

• If you occasionally use the space personally (e.g. a spare bedroom also used for non-business purposes), adjust your claim accordingly.

• Don’t claim the mortgage repayment itself—only the interest portion.

• Keep good records across billing-periods; spreadsheets help.

• Save receipts and log usage (hours, rooms) clearly in case HMRC asks for evidence.

Which Method Should You Choose?

• Simplified Expenses: Best for small businesses / sole traders with relatively low home working hours or where getting exact shares is burdensome (shared spaces etc).

• Actual Costs: Better if you have a dedicated work space with higher bills — often leads to a larger allowable claim.

We're here to help with this!!

If you'd like to discuss this further we're here to help. You could cover this in a Power Hour

Or maybe you're feeling ready to hand over your Self-Assessment management?! In which case drop us an email to enquiries@LMOBookkeeping.co.uk and we'll get an appointment in the diary to get you onboard :)