Using Your Home as an Office: How Much Can a Limited Company Director Really Claim?

Working from home has become the norm for many limited company directors. For some, it is a deliberate lifestyle choice. For others, it is simply the most practical way to run a business. Either way, when your dining room doubles as a meeting room or your spare bedroom becomes mission control, household costs inevitably increase.

A common question we hear is whether those costs can be claimed through the company, and if so, how far is too far. This guide explains what you can claim for using your home as an office in the 2025/26 tax year, the two main methods available, and the longer-term considerations many directors overlook.

Why home office claims exist at all

When you work from home, you are using personal space and utilities for business purposes. HMRC accepts that this creates additional costs and allows limited companies to reimburse directors for the business element of those costs.

When handled correctly, this reimbursement:

• Is paid by the company
• Counts as a business expense
• Reduces corporation tax
• Is not taxed as personal income

What HMRC does not allow is claiming personal costs or inflating figures without a clear and reasonable basis. All home office claims rest on that principle.

Two ways to claim for working from home

Option one: the flat-rate home working allowance

For the 2025/26 tax year, HMRC allows directors to claim

£6 per week for working from home, without needing to justify the figure using bills or calculations. Over a full year, this amounts to £312 paid by the company.

This approach suits directors who work flexibly from shared spaces, do not have noticeably higher household bills, or simply want a low-risk, low-effort claim.

Option two: claiming based on actual household costs

If £6 per week does not reflect the true cost of running your business from home, you can claim more by calculating the business portion of certain household expenses.

Typically allowable costs include:

• Electricity and heating
• Metered water
• Business proportion of broadband usage

These are variable costs that increase as a result of working from home.

Fixed household costs such as rent, mortgage payments, council tax, buildings insurance, and broadband line rental are generally not allowable, as they would be incurred regardless of where you work.

The admin trade-off directors should understand

Claiming actual costs can increase allowable expenses, but it comes with additional responsibility. You must keep copies of bills, document how percentages are calculated, and apply the method consistently each year.

A crucial issue many directors miss: exclusive use

If a room in your home is used exclusively for business purposes and nothing else, it can affect Capital Gains Tax when the property is eventually sold.

This is often overlooked by directors who claim higher home office costs without realising the long-term implications.

Final thoughts

Claiming for using your home as an office is entirely legitimate. The key is choosing an approach that reflects how you actually work and considering the long-term tax impact, not just the short-term saving.

If you are unsure which method suits your circumstances, book a free call with The Accounting Crew to talk it through before making any decisions.