If you’re self-employed and use part of your home as an office, working out exactly how much of your gas, electricity and other household costs count as “business” rather than “personal” can be a real headache.
HMRC’s simplified expenses scheme is designed to take that pain away.
How it used to work (and still can)
Before simplified expenses came along, the standard method was to:
- Measure the floor space of the room you use as your office and work it out as a proportion of your home’s total floor space.
- Calculate how many hours per week you actually use that room for business.
- Apply the combined percentage to your bills for heat, light and power.
You also had to remember that not every bill aligns neatly with the tax year — quarterly electricity statements being a classic culprit — so you’d often need to apportion individual bills across two financial years to get the figures right.
It works, but it’s fiddly, and the maths can quickly get out of hand.
The simpler alternative
Rather than wrestling with bills and percentages, HMRC lets you claim a flat monthly rate based purely on how many hours per month you work from home. No receipts, no apportioning — just one straightforward calculation.
This is officially called the Working from Home Allowance, and it’s available to self-employed sole traders and partnerships. It’s not available if your business is a limited company — company directors need to use a different method (typically the £6 per week flat-rate reimbursement, which is a separate scheme).
The eligibility threshold: you must work from home for at least 25 hours per month to qualify.
The flat rates
| Hours of business use per month | Flat rate per month |
|---|---|
| 25 to 50 hours | £10 |
| 51 to 100 hours | £18 |
| 101+ hours | £26 |
These rates have been in place since April 2020 and still apply for 2026/27. The Budget on 28 October 2026 didn’t change them for 2027/28. You apply the right band to each month individually, then add the months together at the end of the year.
Worked example
Matt works from home for 38 hours per month from April through December, and 58 hours per month from January through March.
- April to December (9 months in the 25–50 hour band): 9 × £10 = £90
- January to March (3 months in the 51–100 hour band): 3 × £18 = £54
Total he can claim: £144
You don’t need to keep utility bills for this calculation — that’s the whole point. Just note the number of hours worked within your Pulse Accounts and you can show this to HMRC if they were to ask.
What the flat rate doesn’t cover
This is the bit people most often miss: the simplified rate covers your heat, light and power only.
Phone and broadband aren’t included, so work out the business share of those separately and claim it on top. Read more in our guide to broadband, mobile and phone lines.
Fixed costs, like council tax and mortgage interest, are different again. HMRC’s manual says using the flat rate doesn’t stop a separate claim for a share of these, where part of them clearly relates to the business. Whether that applies depends on how you use the room, so ask us before you claim.
Is the flat rate always the best choice?
Not always. For some sole traders, calculating the actual costs produces a larger claim — particularly if you have high household bills or use a significant portion of your home for business. HMRC offers a free Simplified Expenses Checker that compares both methods side-by-side, so it’s worth running the numbers before committing.
You can switch between methods at the start of each new tax year, so even if simplified expenses are right for you now, it’s worth checking again every so often.