Expenses employees can claim for working from home

Overview 🏠

Employees working from home can claim certain expenses tax-free, but only if the costs meet specific conditions. HMRC provides guidance on what qualifies, and it’s important to distinguish between equipment and household expenses.

💻 Home-working Equipment

A company can provide employees with home-working equipment such as:

Office furniture (e.g. desks, chairs, lamps)
Stationery and consumables
Computer and IT equipment

These items are exempt from tax provided both of the following conditions are met:

Any private use is insignificant.
The sole purpose of the equipment is to enable the employee to perform their job.

🚫 Items That Are Not Exempt

Certain items and improvements are specifically excluded from tax exemption:

Motor vehicles, boats, or aircraft
Extensions, conversions, or alterations to a property (for example, a loft conversion or garden office)

These are considered improvements to the employee’s home and not necessary business costs.

🔗 HMRC: Tax exemption for homeworking equipment

🏡 Household Expenses

Employees who work from home may incur additional household costs, such as:

Extra heating or lighting in the workspace
Increased water or internet usage
Higher home insurance premiums

These costs can be reimbursed tax-free if:

The employee works from home under a formal homeworking arrangement (ideally written into their employment contract).
The reimbursement only covers reasonable additional costs incurred because of homeworking.

💡 Costs that do not change whether the employee works at home or not, such as rent, mortgage payments, or standard utility standing charges, cannot be reimbursed tax-free.

🌐 Internet and Broadband

If an employee already has broadband, the company cannot reimburse it tax-free.
If the employee did not previously have broadband and requires it solely for work, the cost of installation and ongoing charges can be reimbursed tax-free.
Mobile phones provided by the employer are normally exempt if the contract is in the employer’s name.

💷 Flat Rate Allowance

Instead of claiming actual costs, employers can pay employees a flat rate allowance for homeworking expenses.

Up to £6 per week (£26 per month) can be reimbursed tax-free.
No receipts or records of actual expenditure are required.

🧾 Can Employees Claim Tax Relief Themselves?

Employees can only claim tax relief if:

They personally incurred home-working expenses, and
These were not reimbursed by the employer.

In practice, this is quite rare. HMRC is unlikely to grant relief where working from home is voluntary rather than required by the employer.

Employees can check eligibility using HMRC’s online tool:

🔗 Check if you can claim tax relief for working from home

👩‍💼 What About Directors?

The rules for directors are the same as for employees. However, directors who personally incur home-working costs can recharge expenses to their company using the normal home office recharge method.

🔗 See our guide: Recharging home-working costs

✅ Summary

Home-working equipment is tax-free if private use is minimal and it’s necessary for work.
Household expenses can be reimbursed tax-free if they increase because of home-working.
The flat rate allowance (£6 per week) is simple and approved by HMRC, however it is low and may not reflect the true cost of working from home.
Broadband and home improvements require careful consideration.
Directors follow the same rules but can recharge certain costs to the company.