The simple, safe way: £6 a week
If you work from home for your company, the company can pay you £6 a week to cover the extra cost of doing your work there, the bit of heating, lighting and so on that you only use because you're working. That's £26 a month if you're paid monthly.
Two things make this the easy option:
- You don't need to keep any receipts or work anything out. The £6 is a set figure HMRC accepts.
- It's tax-free. The company pays it, it counts as a business cost, and it doesn't add a penny to your own tax bill.
For most people working from home, this is all you need.
The mistake that costs you money: do NOT expense your household bills
Get this one wrong and it costs you money.
Your home rent, your mortgage, your council tax, your whole electricity or gas bill, these are your personal costs. You would pay them whether you worked from home or not. Do not put them through the company.
If the company pays or pays you back for your personal household bills, HMRC treats that money as a perk you've been given, and you get taxed on it. So instead of saving tax, you've created a tax bill for yourself. It's one of the most common home-office mistakes, and it's exactly the thing the £6 a week is designed to keep you clear of.
The simple test: the extra cost of working from home can be covered. The cost you'd have anyway can't. The £6 a week stays safely on the right side of that line.
What if my real home-office costs are more than £6 a week?
They can be. But here's the key thing, and it's where a lot of people go wrong: as a director you're an employee of your own company, and the rules for you are different from the rules for a self-employed sole trader. You cannot take a slice of your rent, mortgage, council tax or water rates just because you work from home. Those are costs you'd pay anyway, so they stay personal, the same rule as the section above.
What you can do, if the real extra cost of working at home genuinely comes to more than £6 a week, is have the company cover those extra running costs instead of the flat rate, the bit of gas and electricity you only burn because you're working, extra business phone or internet, and so on. To do that you have to keep the evidence that shows the extra cost is really more than £6 a week. It's only ever the extra, never a share of the bills you'd have anyway.
There's also a more formal, advanced setup where you rent part of your home to your own company. That can work, but it turns the money into personal rental income you have to declare, and it needs a proper agreement, so it's a job for an accountant rather than something to set up off this page. We work out the right, safe figure for you, or point you to an accountant if the rent route is genuinely the better fit.
What about a desk, a chair, or a laptop for working at home?
That's different. When the company buys equipment for you to do your job, a laptop, a desk, an office chair, that's the company's kit, not a home bill. It follows the rules for equipment, where the cost usually comes straight off the company's profit. We cover that in our guide on claiming equipment.
How SimpleReturns handles it
Tell us you work from home and we add the right home-working amount into your costs, the safe £6 a week by default, or your genuine extra running costs if you have the evidence. We keep your personal household bills where they belong, out of the company, so you never accidentally hand yourself a tax bill. You see every figure before anything is sent.