Can I claim expenses for business use of utilities like gas and electricity?

Understanding what “business use” means for household utilities

When you run a business from home, it’s natural to wonder whether part of your gas and electricity bills can be treated as business expenses. After all, you may be heating the room where you work, powering the laptop you use for client work, and keeping the lights on while you manage orders or prepare invoices. The good news is that in many cases you can claim a proportion of utility costs where there is genuine business use. The trick is doing it in a way that is reasonable, consistent, and properly evidenced.

“Business use of utilities” usually refers to the additional costs you incur because you use your home as a place of business. That might be a dedicated office, a workshop, a therapy room, or a studio. It can also apply where your home doubles as a base for administrative work even if your main work happens elsewhere. What you typically can’t do is treat your entire utility bill as a business expense simply because you sometimes check emails at the kitchen table. The key question is whether there is a clear business purpose and a method to identify the business portion of the cost.

Utilities like gas and electricity are classic “shared costs.” Your household uses them anyway, and your business use is usually only part of the total. That’s why most claims are apportionments: you take the full cost and allocate an appropriate percentage to the business. Alternatively, some systems allow simplified flat-rate methods that avoid detailed calculations. Which method is best depends on your circumstances and the expectations of your local tax authority.

Which utilities can be claimed, and what counts as “utilities”?

When people say “utilities,” they often mean gas and electricity, but the category can be broader depending on where you live and how the costs are billed. Common household utilities that might be relevant to a home-based business include:

Gas (space and water heating), electricity, water and sewerage, and sometimes other energy-related costs such as heating oil, LPG, or solid fuel if those are used. In some cases, waste disposal or local services may be considered, but these can be treated differently from energy utilities. Internet and phone are often discussed in the same breath because they’re essential for many businesses, but they are usually treated as communications expenses rather than utilities. That distinction matters mostly for how you record them and what evidence you keep.

Gas and electricity are the big ones because they are both expensive and closely linked to working from home. Electricity might cover lighting, computers, printers, machinery, and charging tools. Gas might be the primary heating source, affecting the comfort and usability of the workspace. If your business involves storing temperature-sensitive products or operating energy-intensive equipment, your business-related consumption might be easier to demonstrate because the business use is significant and distinct.

Who can claim: self-employed, freelancers, limited companies, and side hustles

Whether you can claim a portion of utilities often depends on your business structure and how you use your home. Broadly, the principle is similar across structures—only the business portion is claimable—but the practicalities can differ.

If you are self-employed (a sole trader, freelancer, or independent contractor), you typically claim an allowable share of home running costs as part of your business expenses. This is often recorded as “use of home as office” or “home office expenses.”

If you operate through a limited company, the situation can be more nuanced. The company is a separate legal entity, and your home is usually personally owned or rented by you. In that scenario, you may be reimbursed by the company for business use of home, or you may enter into an arrangement such as a home office license agreement. Some approaches have knock-on implications for personal taxes and for things like capital gains treatment or benefits-in-kind, so it’s especially important to use a method that is common and conservative.

If you have a side hustle that isn’t yet a full-time operation, the same principles still apply. You can usually claim a proportionate share if the activity is a genuine business and not merely a hobby, and if there is real business use of the home. The claim should be modest and defensible, especially when business activity is small compared with household use.

Two main ways to claim: detailed apportionment vs simplified methods

Most people end up using one of two approaches: a detailed apportionment based on actual costs, or a simplified method that uses a flat rate. Both can be valid, but they have different trade-offs.

A detailed apportionment aims to reflect reality: you work out your actual gas and electricity costs and then calculate the business portion using a reasonable allocation. This can lead to a higher claim if you have significant business use, but it requires more record-keeping and consistent calculations.

A simplified method uses a fixed allowance, often linked to hours worked at home or a flat monthly amount. This is appealing because it is easy, requires less evidence, and reduces the chance of calculation errors. However, simplified methods may lead to a lower claim than you could get with detailed apportionment if your bills are high or your business use is substantial.

Choosing between these options isn’t only about maximizing the claim. It’s also about the administrative burden and your risk tolerance. A simple approach that you can explain confidently is often better than a higher number you can’t justify.

How detailed apportionment works in practice

Detailed apportionment starts with the total cost of utilities over the relevant period—often a month, quarter, or year. You then decide how to attribute part of those costs to business use. The most common allocation factors include:

Space: the proportion of your home used for business. This might be calculated by number of rooms (e.g., one room out of five) or by floor area (e.g., 10 square metres out of 80). Floor area is generally more precise, but room counting can be acceptable where rooms are broadly similar and you want a simple method.

Time: how long the space is used for business compared with personal use. If your “office” is also a guest room and it’s used for work during weekdays but personal use on weekends, you may need a time apportionment. If the room is used exclusively for business, you may not need time, but exclusive use can raise other considerations (discussed later).

Type of cost: some utility costs are more directly linked to business use than others. Electricity for a dedicated business machine might be measurable or estimable, whereas heating might be more diffuse. In some cases, you might allocate heating based on space and time, but allocate business equipment electricity based on actual device usage.

To give a simple example, imagine your annual electricity bill is £1,200. You use one room as an office out of six rooms in the home, and you use it for business about 40 hours a week. If you assume the room is used for personal purposes outside working hours, you might apply a time apportionment. A rough approach could be: space 1/6, time 40 hours out of 168 hours per week (about 23.8%). That gives 1/6 × 23.8% ≈ 4.0% of the total, or about £48. That sounds low to many people because it spreads usage across all hours of the week. In reality, you might use a more realistic “active household time” model or treat certain costs differently. The point is not the number itself; the point is to choose a method that reflects your actual circumstances and doesn’t overstate the claim.

Many people prefer a simpler time approach: if the room is not used personally very often, they might apply space only (1/6) and skip time. Others apply a space method to heating but a device-based method to electricity. There isn’t one perfect formula; there is a defensible formula that matches your reality.

Device-based calculations for electricity

Electricity can sometimes be allocated more directly than gas, especially if your business relies on identifiable equipment. A device-based calculation estimates how much electricity your business equipment consumes and claims that portion. This can be particularly useful if you work from home but your business consumption is clearly “extra” compared with typical household usage.

To do this, you identify the wattage (power rating) of each business device, estimate the hours it runs for business, convert to kilowatt-hours (kWh), and multiply by your unit rate. The basic calculation is:

(Watts ÷ 1000) × hours used = kWh

Then:

kWh × electricity unit price = cost

If your laptop uses about 60 watts on average and you use it 6 hours a day for 220 working days, that’s (60/1000) × 1,320 = 79.2 kWh. At 30p per kWh, that’s about £23.76. Add monitor, printer, dedicated lighting, a router if it’s business-specific, charging tools, and so on, and the number can become meaningful. You may also include a reasonable portion of the standing charge if your business use is material, but in many cases it’s simpler to treat standing charges via the same apportionment method as the overall bill.

Device-based calculations can be compelling because they show a clear link between business activity and energy consumption. The downside is that you need to keep your assumptions consistent and realistic. Overestimating hours or using maximum wattage when real usage is lower can undermine the credibility of the claim.

Gas and heating: why it’s harder to separate and how to do it

Gas is often used for space heating and hot water, and those costs typically benefit the whole household. If you heat the whole home during the day, it can be hard to argue that the heating is “for the business.” However, you may be able to claim the incremental cost of heating the workspace during your business hours, especially if you can show that your working pattern increases the heating usage compared with what it would otherwise be.

A common approach is to apportion gas costs using space and time. If you heat the home primarily because you are working in it during the day (when you might otherwise have been out), that can support a business-use claim. If your home would be heated anyway because family members are at home, the business portion may be smaller.

If you have heating controls such as thermostatic radiator valves, zoning, or room-by-room electric heaters used specifically in the workspace, it becomes easier to justify business use because you can show that the office has distinct heating patterns. In those cases, you might allocate the cost of heating the office as a larger share compared with a simple “room count” method, provided your reasoning is clear.

Be cautious with claiming large portions of gas costs unless your business use is truly substantial. Heating is one of the areas where claims can look inflated if they don’t match a typical household pattern.

What you need to keep as evidence

For utility claims, the quality of your records matters as much as the calculation. Good evidence doesn’t have to be complicated. The goal is to be able to show: (1) the costs you incurred, (2) that you use part of your home for business, and (3) how you calculated the business portion.

Useful documents include:

Copies of utility bills showing the supplier, address, billing period, and amounts paid. If you pay by direct debit and bills are estimated, keep the annual statement and any reconciliation. If you have variable tariffs, keep notes of the unit rate used if you do device-based calculations.

A simple written explanation of your apportionment method, including how many rooms or what floor area is used, how many hours you work from home, and whether the space has mixed use. A short note saved with your accounting records is often enough.

Optional supporting evidence such as a floor plan, photos showing the workspace, or diary entries showing working patterns. You don’t always need these, but they can be helpful if your claim is significant or your home use is complex.

If you use a dedicated meter or smart plug measurements for business equipment, keep the readings or exports. Even a short measurement period used to estimate typical consumption can strengthen your claim.

Exclusive vs mixed use: the “dual purpose” issue

Many home workspaces have mixed use. A spare room may be an office by day and a guest room a few weekends per year. A dining table may become a desk during business hours but revert to family use for meals. The more mixed the use, the more careful you need to be with apportionment.

In general, you can only claim the business element of costs. If the utility cost is incurred for both private and business purposes, you must separate the business share. If separation is not possible, some tax systems treat the whole expense as non-allowable. This is where using an apportionment formula becomes critical: it creates a rational separation method.

However, there’s another concept: whether the room is used “exclusively” for business. Exclusive business use can make the claim easier because you don’t need to adjust for personal time. But exclusive use can sometimes trigger other consequences, such as affecting eligibility for certain reliefs on sale of the property, or creating issues for companies reimbursing personal costs. Not every jurisdiction treats this the same way, but as a general principle, claiming that a room is exclusively business can have wider implications. Many people intentionally keep some minimal personal use of the room to avoid those complications, while still making a reasonable claim for business use during working hours.

The practical takeaway is to be accurate about how you use the space. Don’t claim “exclusive business use” if you sometimes use the room personally. Likewise, don’t avoid claiming anything if the business use is real—just apportion it sensibly.

Utilities in rented homes: what if you’re a tenant?

If you rent your home, you can often still claim a business proportion of utilities, provided you personally pay them (directly to suppliers or via the landlord) and you are genuinely using the home for business purposes. The calculation works in the same way: you identify the total cost and apportion the business element.

If utilities are included within your rent and you don’t get separate breakdowns, you may need to estimate the utility portion or rely on a simplified method. In practice, many renters prefer a flat-rate approach because it avoids complicated estimates. If you do estimate, keep notes on how you arrived at the figure—for example, average utility costs for similar properties, or information provided by the landlord.

If you have a separate agreement with your landlord regarding business use of the property, make sure your claim aligns with it. Some leases restrict business activity or require permission for certain uses. That is more of a contractual issue than a tax one, but it can become relevant if your home business is significant.

What if you have a dedicated business meter or separate workspace?

If part of your home has a separate meter—for example, a converted garage with its own electricity supply—you can often claim the metered amount more directly. This is one of the cleanest scenarios because you can point to actual usage rather than relying on apportionment estimates. Keep the metered bills and clearly show which supply relates to the business area.

Similarly, if you work in a separate structure on your property, such as a garden office or studio with its own heating and power, your utility claim can be much easier to justify. If that structure is used for business and not personal use, you may be able to treat most or all of the related utility costs as business expenses, subject to local rules.

Even without a separate meter, improvements like sub-metering, smart plugs, or energy monitors can provide data that supports your business-use allocation. You don’t need to turn your home into a laboratory, but a little measurement can go a long way if you want a higher-confidence claim.

Common mistakes that cause trouble

Utility expense claims are rarely a problem when they’re modest and consistent. Issues tend to arise when claims look exaggerated, inconsistent year to year, or poorly explained. Here are some common pitfalls to avoid:

Claiming 100% of gas and electricity when you work from home but also live there. Unless you have a genuinely separate, exclusively business premises with separate billing, a full claim is usually hard to justify.

Using an arbitrary percentage with no rationale, such as “I claim 50% because I work from home.” A percentage can be fine, but you should be able to show how you arrived at it (space, time, device usage, or a simplified method).

Double counting by claiming a simplified home-working allowance and also claiming a portion of actual utility bills for the same period, where the rules do not permit both.

Inconsistent methods where the percentage changes frequently without any change in circumstances. If you change method, note why—tariff changes, moving house, adding equipment, changing workspace, or switching from part-time to full-time home working.

Forgetting standing charges or treating them inconsistently. Standing charges are part of the cost of having the supply. Many people simply include them in the total bill and apportion as normal, which is usually easier.

Not separating personal upgrades from business costs. If you install a high-powered heater to improve home comfort generally, it’s not automatically a business cost. If you install a specific heater in the business workspace used during working hours, that is easier to justify.

How to decide on a “reasonable” percentage

People often ask, “What percentage can I claim?” The honest answer is that there is no universal percentage that fits everyone. A reasonable percentage is one that reflects your actual use and that you can explain clearly. If you use one room as an office in a five-room home, a space-based starting point might be 20%. But if you only use it for business a portion of the day and the room also has personal use, the actual business percentage might be lower.

Here is a practical framework to arrive at a reasonable number:

Step 1: Define the workspace. Identify the room or area that is used for business. If you use multiple areas, decide whether you’ll apportion across them or focus on the primary workspace.

Step 2: Choose a space metric. Rooms (simple) or floor area (more accurate). If rooms vary significantly in size, floor area is usually better.

Step 3: Assess time and exclusivity. How many hours per week is the space used for business? Is it used personally at other times? Be realistic.

Step 4: Consider utility type. Electricity might be better estimated via devices; heating might be better via space/time apportionment.

Step 5: Sanity-check the result. Compare the final annual claim to your total utility spend and to the scale of your business. If you’re claiming a large share, your evidence should be stronger.

The goal isn’t to maximize a deduction at any cost. The goal is to claim what you’re genuinely entitled to in a way that would make sense to a third party reviewing your records.

How to record these expenses in your bookkeeping

From a bookkeeping perspective, it helps to be consistent and transparent. You can record the full utility bill as a household cost and then post a business-use proportion as an expense. Alternatively, you can record only the business portion in your accounts and keep the bills as supporting evidence. The best approach depends on how your accounting system is set up and whether you separate personal and business finances.

A practical method is to keep the bills in a folder (digital or physical), calculate the business portion monthly or quarterly, and record a single “use of home” entry. This reduces the chance of mixing personal transactions into business accounts while still capturing the deduction.

If you operate through a company and reimburse yourself, you should keep a clear paper trail: the calculation, the reimbursement payment, and a note stating it is reimbursement for business use of home utilities. Keeping it tidy helps avoid confusion later.

Special situations: energy-intensive businesses and unusual patterns

Some home businesses use far more energy than typical office work. Examples include baking and food production, crafting with kilns or heat presses, running servers, operating refrigeration for stock, or using power tools regularly. In these cases, a standard “one room out of five” approach may understate business use, while a simplistic large percentage might look suspicious without proof.

For energy-intensive businesses, consider a hybrid approach: use device-based calculations (or metered measurements) for high-consumption equipment, and a space/time apportionment for general household heating and lighting. This approach can produce a claim that is both fair and well supported.

Also consider your working schedule. If you work late nights and weekends, your electricity use pattern might be different from a standard nine-to-five. If your business requires maintaining a stable temperature for products or equipment, your heating and electricity claims may be more justifiable, but again, measurement or careful notes can help support your figures.

Can you claim past utility expenses?

In many cases, you can correct past returns or accounts if you missed allowable expenses, subject to time limits and local procedures. If you’ve been working from home for years but never claimed any utility share, it may be worth reviewing previous periods. However, you should be cautious: reconstructing old claims without bills or without a credible basis can be difficult.

If you do revisit past periods, gather the bills or statements for those periods, use the same method consistently, and keep a note explaining your assumptions. If your circumstances were different—different home, different workspace, different hours—reflect that in the calculation rather than applying today’s percentage to past years.

What about internet, phone, and other home running costs?

Although the focus here is gas and electricity, people usually want to understand the broader set of home costs that might be claimable. Internet and phone are often easier to justify because they can be closely tied to business activity. If you have a separate business line or a separate broadband connection for business, those costs are more straightforward. If you use a single household connection, you generally apportion based on business use, such as data usage, time, or a reasonable percentage.

Other home running costs sometimes considered include home insurance (where business use affects the policy), mortgage interest or rent (in some systems), council-type charges, repairs and maintenance, and cleaning. These can be more complex and may require additional care, especially if you have a company arrangement or if a room is used exclusively for business. Utilities are often the simplest entry point, but they sit within a wider picture of home-working costs.

Practical tips to make your claim easy to justify

Keep it consistent. Pick a method and stick with it unless your circumstances change. Consistency signals that you’re aiming for accuracy rather than opportunism.

Write a one-page “method note.” State your workspace, your hours, and your calculation basis. Update it if anything changes. This is one of the simplest ways to protect yourself later.

Don’t overcomplicate small claims. If your business use is modest, a simplified method or a conservative percentage may be more sensible than tracking device wattage.

Measure big-ticket usage. If you run high-energy equipment, measure it for a week or two with a smart plug or energy monitor and extrapolate. Data beats guesswork.

Separate business upgrades. If you purchase equipment specifically to run your business, record it clearly as such. Utility apportionment should then reflect the energy that equipment uses, rather than trying to inflate a general household percentage.

Be realistic about heating. Heating claims that assume the home is heated only for business can raise eyebrows unless you have evidence like zoning, dedicated heaters, or a clear pattern that supports incremental heating use.

What to do if you’re unsure

If you feel uncertain, start with a conservative approach. A modest, defensible claim is usually better than a large claim that you can’t comfortably explain. If your business grows, your workspace changes, or you invest in energy-intensive equipment, revisit your method and adjust it to better reflect reality.

It can also help to discuss your approach with a qualified accountant or tax adviser, especially if you run a limited company or you plan to claim a substantial portion of home costs. A short consultation can clarify what methods are commonly accepted in your area and help you avoid unintended consequences.

Summary: yes, you often can—if you apportion fairly and keep records

In many cases you can claim expenses for the business use of utilities like gas and electricity when you work from home. The claim is usually a proportion rather than the full amount, and it should be based on a reasonable method—such as space and time apportionment, device-based electricity calculations, or a simplified flat-rate allowance where available.

The most important points are to separate business from personal use, keep the bills and a clear explanation of your method, and avoid overstating costs that are primarily private. Done properly, claiming a fair share of utilities can reduce your taxable profit while staying within the rules and keeping your records clean.