Can I claim working from home expenses as a sole trader?

Can I claim working from home expenses as a sole trader?

Working from home can be a smart and flexible way to run a business as a sole trader. It can also create a lot of practical questions about tax, especially when it comes to expenses: what can you claim, how do you calculate it, what records do you need, and how do you avoid claiming too much? The good news is that, in most cases, you can claim some working from home expenses as a sole trader, as long as they are genuinely linked to your business activity and you calculate them in a sensible, supportable way.

This article explains how the rules typically work for sole traders, the different methods you can use to calculate working from home expenses, what types of costs are usually allowable, what costs usually are not, and what to document so you can feel confident if you ever need to justify a claim. It also covers common scenarios and mistakes so you can choose a method that matches your circumstances and keep your claims accurate.

What “working from home expenses” actually means for a sole trader

When people say “working from home expenses,” they usually mean the extra or apportioned costs of running a business from a home address. Because your home is partly personal and partly business (to some degree), the key idea is that you can only claim the business-related portion, not the private portion. You are not claiming “your home” as an expense; you are claiming specific costs that have a business use.

For a sole trader, this normally includes a share of household running costs such as electricity, gas, water, and sometimes internet and phone costs, plus the direct costs of business equipment and supplies used at home. In some situations it can include a share of rent or mortgage interest, or a share of council tax and insurance, but those categories can be sensitive and may have knock-on effects, so they need extra care.

The core principle is simple: you can claim an expense if it is incurred wholly and exclusively for the purposes of your trade. When a cost is partly business and partly personal, you generally need to apportion it and only claim the business portion. This is why most working from home claims are calculated using either a simplified fixed rate approach or a detailed calculation based on actual costs and time/space use.

Key question: are you working from home by choice, or because it’s essential?

Many sole traders work from home because it’s convenient, not because it is the only option. In practice, you can still claim legitimate business-related home working costs, but the way you justify and calculate them matters. If you have a dedicated workspace and you spend a meaningful amount of time working there, you will usually have a stronger basis for claiming a proportion of relevant costs. If you only occasionally do admin from the kitchen table, your claim would typically be smaller and limited to things that clearly relate to business use.

Think about your home working pattern honestly. How many hours per week do you work from home? Do you have a defined area used for work? Do you have costs that rise specifically because of business activity (for example, higher electricity use due to computers and printing)? You do not need a perfect system, but you do need a method that is consistent and reasonable.

Two common ways to calculate working from home expenses

Most tax systems that allow home working claims offer two broad approaches: a simplified method (often based on hours worked or a flat rate) and an actual-cost method (based on apportioning real bills). Each has pros and cons. The simplified method is easy and requires less record-keeping. The actual-cost method can produce a larger deduction, but requires more documentation and careful calculation.

Simplified method (flat rate or hours-based rate)

A simplified method typically lets you claim a set amount per week or per month based on how many hours you work from home. This is designed to reduce the burden of splitting bills and calculating proportions. It can be ideal if your home working costs are modest, your home workspace is not clearly defined, or you simply want a low-maintenance approach.

With a simplified method, you normally do not need to keep every utility bill to justify the claim, but you should still keep evidence of the time you worked from home and the basis for your claim. For example, a diary, calendar entries, time-tracking logs, job sheets, or appointment records can support your working pattern. The simplified method is often conservative, meaning it may not fully reflect your actual costs, but it trades precision for simplicity.

Actual-cost method (apportioning real household costs)

The actual-cost method involves calculating the proportion of your household running costs that relate to business use. This generally means looking at:

1) Which costs are relevant (utilities, internet, phone, rent or mortgage interest in some circumstances, insurance in some circumstances, repairs, and so on);

2) How much of the home is used for business (often room-based, square footage-based, or area-based);

3) How much of the time that space is used for business (especially if the room is not exclusively used as an office).

This method can lead to a larger claim if you work from home a lot or have a dedicated workspace. But you must be able to explain your assumptions. For example, if you claim that one room out of five is used as an office for 40 hours per week, you need to show how you arrived at those numbers. You will also want to keep copies of bills and calculations.

What expenses can you usually claim when working from home?

Working from home expenses usually fall into two categories: direct business costs and apportioned household costs.

Direct business costs

Direct business costs are expenses that you incur specifically for your business and would not exist in the same way without the business. These are usually the easiest to justify, because there is a clear link to business activity. Examples often include:

Office supplies and consumables: printer ink, paper, postage, stationery, packaging if you ship goods, and similar items.

Business equipment: computers, monitors, printers, scanners, desks, chairs, and other tools needed to do your work. Depending on the rules in your jurisdiction, you may claim these as an expense, claim depreciation/capital allowances, or use a small equipment write-off scheme. If you use an item partly for personal use, you usually claim only the business portion.

Software subscriptions and digital tools: accounting software, design tools, cloud storage, project management apps, antivirus/security software, and similar services used for business.

Business phone line or business-only internet: if you pay for a separate business connection or line, it’s generally straightforward. If the same service is shared with personal use, you apportion it.

Business insurance: professional indemnity insurance, public liability insurance, and other trade-related policies are typically business expenses. Home insurance is different and usually needs apportionment if claimable at all.

Direct costs are generally more defensible than broad “household” costs because the business nature is clearer. If you’re new to claiming expenses, focusing first on direct costs can be a practical way to build confidence and record-keeping habits.

Apportioned household running costs

These are costs you pay anyway to live in your home, but where your business activity uses a portion of them. Common examples include:

Electricity and gas: heating, lighting, and powering your devices while you work.

Water: in some cases, if your work meaningfully increases water usage (for many desk-based businesses, this may be minimal).

Internet: a share of your broadband cost if used for business.

Phone: a portion of your mobile or landline if used for business calls. Ideally, keep itemised bills or usage logs.

Rent (in some circumstances): if you rent your home and it is also your business base, you may be able to claim a portion of rent under an actual-cost approach, usually based on space and time.

Mortgage interest (in some circumstances): some systems allow a portion of mortgage interest (not the principal repayment) when you use part of your home for business. This can be sensitive and can affect future tax outcomes, so you should be careful and understand the implications.

Council tax or property taxes (in some circumstances): sometimes a portion can be claimed if the home is used for business, but it depends heavily on local rules and the extent of business use.

Home insurance (in some circumstances): generally apportionable only if it relates to business use and is permitted under local rules. Often the claimable part is limited.

Repairs and maintenance: if it’s a repair that affects the whole property, a portion may be claimed. If it’s a repair specific to the office space, it may be more directly linked. Improvements are treated differently from repairs in many tax systems and may fall under capital rules rather than day-to-day expenses.

Not every household cost is automatically claimable. The most important thing is to claim only the portion that relates to business use, and to use a method that you can explain.

What expenses are usually not claimable (or need extra caution)?

Some costs are often misunderstood. Claiming them incorrectly can trigger questions or lead to adjustments. The following categories are common trouble spots:

Full household bills: it’s rarely acceptable to claim 100% of utilities, internet, or rent if you also live in the property. You typically apportion based on business use.

Mortgage principal repayments: many jurisdictions do not treat mortgage capital repayments as a business expense. Even when mortgage interest can be partly claimable, the principal portion is usually not.

Personal household costs: groceries, personal clothing (unless it is genuine protective workwear or a uniform under local rules), personal entertainment, and other private living expenses are not business costs just because you work at home.

General home improvements: renovations that increase the value of your home, such as a new kitchen or extension, are typically not treated as normal business running costs. Even if you work from home, these are usually considered personal or capital in nature. A dedicated office conversion may be treated differently depending on local rules, but it is rarely as simple as “expense it all.”

Claiming a room as exclusively business when it isn’t: if you say your spare bedroom is a business-only office but it’s also used for guests, storage, or personal activities, you may need to reduce the claim or apply time-based apportionment.

Over-claiming car or travel costs tied to home: commuting rules vary by jurisdiction, but many systems do not allow ordinary commuting as a business expense. If your home is your principal place of business, travel to clients can sometimes be treated differently than travel to a regular workplace. This area is complicated, and home working can change the analysis, so it needs careful handling.

How to apportion costs fairly: space, time, and usage

When you use actual costs, apportionment is the heart of your calculation. There are a few common approaches, and you can choose one that best matches your circumstances as long as it is reasonable and consistent.

Room-based apportionment

A simple method is to apportion costs by the number of rooms. For example, if you have five rooms (excluding bathrooms and hallways, depending on how you count) and one room is used as an office, you might start with 1/5 of certain household costs. Then you adjust for time use if that room is not exclusively a workspace.

This approach can be easy, but it can be imprecise if rooms vary in size. A small box room used as an office may not reasonably represent the same proportion as a large living room. If that matters, use an area-based method instead.

Area-based (square footage or square metres)

An area-based method uses the floor space of the work area as a proportion of the total usable floor space. This is often more accurate, especially in homes with rooms of different sizes. You can measure the office area and compare it to the overall home area (excluding spaces not relevant, depending on local guidance).

Area-based apportionment is particularly useful if you have a defined workspace in a larger room, such as a section of a living room. In that case, you might apportion by the percentage of the room dedicated to work, and then by the time you use it for work.

Time-based apportionment

If a space is used for both business and personal purposes, you can apportion by time. For example, if you use the dining table as a workspace 20 hours per week and the rest of the time it is used personally, you might claim a smaller percentage of relevant costs. Time apportionment often makes sense when there is no dedicated office.

Time-based apportionment can also be layered on top of room-based or area-based apportionment. For instance, you might calculate that your office is 10% of your home by area, and that it is used for business 70% of the time. Then your claim might be 10% x 70% = 7% of certain costs. The precise logic depends on the cost type and what is reasonable.

Usage-based apportionment

Some costs are best apportioned using actual usage rather than space or time. Phone expenses are a classic example. If you can identify business calls and data usage, you can claim the business portion more directly. Internet can be apportioned by a reasonable estimate of business use, though it’s often harder to measure precisely. If you use the internet heavily for business (video calls, large file transfers, constant cloud usage) and lightly for personal use, you may justify a higher percentage than someone who mostly uses it for streaming in the evenings.

Example calculations (to show how this works in practice)

Examples help clarify what “reasonable apportionment” can look like. These examples are illustrative only, but they show the logic behind typical approaches.

Example 1: Dedicated home office, actual-cost method

You live in a three-bedroom home with one small bedroom used as a dedicated office. You work from home around 40 hours per week. The office is not used for personal purposes. You decide to apportion relevant household running costs by area. The office is 10 square metres and your home’s usable area is 100 square metres, so the office is 10% of the home.

If your annual electricity and gas cost is 2,000, you might consider whether 10% is reasonable for the office portion. You could claim 200 if your office use genuinely increases heating, lighting, and device usage. You may also apportion broadband: if broadband is 480 per year, and you estimate 70% of usage is business-related, you might claim 336. For rent or mortgage interest, if permitted, you might claim 10% of the eligible portion, but you would want to confirm the rules and consider the implications.

Example 2: No dedicated room, simplified method

You run a mobile service business and do admin at home about 10 hours per week, mostly emails, bookkeeping, and scheduling. You don’t have a dedicated office; you work at the kitchen table. Your household bills are not meaningfully higher because the admin work uses a laptop and the home is heated anyway. In this scenario, a simplified flat rate method might be the most practical, because the apportionment of utilities could be small and difficult to measure. You would keep a log or calendar showing the hours you work at home and claim the amount allowed under the simplified method.

Example 3: Mixed-use room, time-based adjustment

You use a spare room as a part-time office, but it’s also used as a guest room for visiting family. You use it for work roughly 25 hours per week. If you apportion by rooms, you might start with 1/5 of household running costs (if you have five relevant rooms), then reduce that for time use. If you treat the room as a workspace for 25 hours out of a possible 168 hours in a week, the time-based factor is about 14.9%. That would make the final claim smaller than if the room were used exclusively for business. In practice, you might choose a more realistic time basis (for example, waking hours) if permitted, but you should be consistent and able to explain why your approach makes sense.

Record-keeping: what you should keep and for how long

Even if you use a simplified method, good records protect you. If you use actual costs, records are essential. Here are the types of documentation that commonly support a home working claim:

Proof of costs: utility bills, broadband bills, phone bills, rent statements, mortgage interest statements (if relevant), council tax bills (if relevant), insurance documents, and receipts for repairs or office-related purchases.

Proof of business use: a description of your workspace (for example, a dedicated office), your working pattern, and how often you work from home. A calendar, time-tracking logs, job sheets, client appointment logs, or a simple written diary can help.

Your calculation: keep a spreadsheet or written breakdown showing your apportionment method. If you use area-based apportionment, keep your measurements. If you use room-based apportionment, note how you counted rooms. If you use time-based apportionment, keep the weekly hours.

Business versus personal split: for phone and internet, keep a note of your business percentage and how you arrived at it. Itemised phone bills, call logs, or app usage summaries can strengthen your position.

Consistency matters. If you choose a method, stick with it unless your circumstances change. If they do change (for example, you move house, start using a dedicated office, or your home working hours increase), update your calculation and keep notes about why the numbers changed.

Equipment and furniture: expenses vs capital items

One of the most common questions for sole traders is whether they can claim the cost of a laptop, desk, chair, or other office equipment. The answer depends on local tax rules, but the general concept is that some items are treated as capital assets rather than day-to-day running expenses. A capital item is something that lasts more than a short period and has ongoing value, like a computer or furniture. Many tax systems require capital items to be claimed via depreciation or capital allowances instead of as an immediate expense, although there may be exceptions or simplified schemes for smaller purchases.

If you buy a laptop used 80% for business and 20% for personal use, you would normally claim only the business portion. If you later change how you use the laptop, you may need to adjust. The same logic can apply to furniture. A desk used only for business may be easier to claim than a desk used for both business and personal purposes.

Keep invoices for these items and note the date of purchase, the cost, and the expected business-use percentage. This makes your claim easier to justify and helps you track assets over time.

Internet and phone: practical ways to support your claim

Internet and phone expenses are often claimed, but they can be tricky because most people use these services personally too. A practical approach is to estimate a reasonable percentage based on how you use them.

For phone, itemised billing can help you identify business calls. If you cannot easily separate calls, you can keep a representative sample period (for example, a month) where you mark which calls are business and then use that ratio as your percentage. If you use a dedicated business phone number or a separate SIM, your claim is usually easier.

For internet, usage is harder to quantify, so you typically use a reasonable estimate. If your business depends heavily on internet usage and you work from home most days, a higher business percentage may be reasonable. If your business use is light and your household streams content daily, a lower percentage is more defensible. If you have a separate business broadband line, that’s usually the cleanest approach, but it may not be cost-effective for everyone.

Can you claim rent, mortgage interest, and council tax?

This is an area where sole traders need extra caution, because the rules can differ significantly by jurisdiction and the consequences can be bigger. In many places, claiming a portion of rent as an expense can be allowable if it is reasonably apportioned for business use. Mortgage interest can sometimes be partly claimable, but mortgage principal repayments typically are not. Council tax and home insurance may sometimes be partly claimable, but often only in limited circumstances.

Even when allowed, claiming these types of costs may affect other parts of your tax position. For example, some jurisdictions treat a home that is partly used for business differently when it comes to future property-related taxes. Also, if your business use is significant and exclusive (such as a room used only for business), it may have implications beyond income tax, including how the property is classified or whether business rates apply.

Because of that, many sole traders choose the simplified method or focus on utility and communication costs instead of claiming rent or mortgage-related costs, especially if their business use is modest. If you are considering claiming a portion of rent or mortgage interest, it’s wise to ensure you understand the full implications and to keep especially strong documentation.

Does having a dedicated office matter?

It can. A dedicated office that is used only for business often makes apportionment clearer. It may justify a more straightforward space-based claim, because the connection to business use is easier to demonstrate. However, exclusive use can also be a double-edged sword in some tax systems, because it can trigger property-related implications. On the other hand, if you do not have exclusive use, you can still claim home working costs, but you often need a time-based adjustment.

The practical approach is to claim what reflects reality. If you have a room that functions primarily as an office but occasionally hosts guests, it’s usually better to acknowledge that and adjust your claim, rather than insisting on exclusive use. A conservative, honest claim is typically easier to defend than an aggressive one.

What about using your home address as your business address?

Using your home address as your registered or trading address does not automatically mean you can claim more. The key question remains: what costs are incurred for business purposes, and what portion of those costs is genuinely business-related? Listing your home as your business address can help show that home working is part of how you operate, but it does not, by itself, justify claiming large shares of household bills.

If you receive business deliveries, meet clients at home, store inventory, or run equipment from home, those facts may support a higher claim for certain costs. But you still need a reasonable method and records.

Common mistakes sole traders make with home working claims

Home working claims are often flagged for mistakes because they are easy to overestimate. Here are common pitfalls to avoid:

Claiming too much without a method: you need a calculation, even if it is simple. “It feels about right” is not a strong basis if you are asked to explain it.

Mixing personal and business purchases: if you buy a computer “for business” but it is mostly used for personal browsing and entertainment, claiming 100% is risky. Be realistic about mixed use.

Claiming meals as home working costs: everyday meals at home are normally personal expenses, even if you eat while working.

Not updating your calculation: if your working pattern changes significantly, your claim should change too.

Forgetting to keep records: you don’t need complicated systems, but you do need enough evidence to show how you arrived at your figures.

How to choose the best method for you

Choosing between simplified and actual-cost methods often comes down to a balance between simplicity and potential tax savings. Here are some practical questions to help you decide:

How many hours do you work from home? If it’s occasional, simplified is often fine. If it’s most of your working week, actual costs may be worth exploring.

Do you have a dedicated workspace? Dedicated space can make actual-cost apportionment easier and more defendable.

Are your household costs high? If you have high utility costs or pay rent in an expensive area, actual-cost apportionment could produce a larger claim.

How comfortable are you with record-keeping? If you dislike paperwork, simplified may be the better fit. If you already track finances carefully, actual costs may not add much extra effort.

Are there potential property-related implications? If your jurisdiction links business use of the home to property-related tax outcomes, be cautious about claiming certain categories.

You can also take a hybrid approach: use the simplified method for household running costs (if allowed) while still claiming direct business costs such as equipment, supplies, and software subscriptions in the normal way.

Practical checklist for making a defensible claim

To wrap your home working claim in a neat, low-stress process, use this checklist:

1) Decide whether you’ll use a simplified method or actual costs.

2) Record your working from home pattern (hours per week) in a consistent way.

3) Identify direct business costs and keep receipts/invoices.

4) If using actual costs, gather bills and decide on your apportionment basis (rooms, area, time, usage).

5) Write down your assumptions in plain language (for example, “office is 10% of floor area; used for business weekdays 9am–5pm”).

6) Calculate the business portion and keep the calculation with your tax records.

7) Review the claim periodically, especially if you move, change your workspace, or change your working pattern.

Final thoughts

Yes, you can usually claim working from home expenses as a sole trader, but the amount you can claim depends on how you work, what costs you incur, and how you calculate the business portion. The safest approach is to claim only what you can justify: direct business costs in full (where appropriate), and household costs only to the extent they relate to business use.

If you want the simplest route, a flat rate or hours-based method is often a good fit, especially if your home working is occasional or your costs are modest. If you work from home most of the time and have a clear workspace, apportioning actual costs can be more accurate and may lead to a larger deduction, but it requires careful calculation and solid records.

Whichever route you choose, aim for consistency, realism, and documentation. A reasonable claim that you can explain is far more valuable than an aggressive claim that causes stress later. If your situation is complex—especially if you are considering claiming rent, mortgage interest, or other property-related costs—it can be worth getting tailored guidance so you understand any wider implications and choose the approach that best supports your business.