Home Office Tax Claim for Directors 2026-27: Complete Guide
The flat rate vs apportioned method — which saves more, the CGT risk to avoid, and a worked example for a director working from a 4-bedroom home.
Why home office matters for directors
Unlike employees (who lost home working expense relief after the end of COVID provisions), directors can still claim legitimate home office costs through their company. The claim reduces taxable company profit — saving corporation tax at 19–25%. For a director working primarily from home, this is a real and ongoing tax efficiency.
Method 1: The HMRC flat rate
£6 per week (£312 per year). Available if you work from home for at least 25 hours per month. No receipts required. Corporation tax saving:
- At 19% (small profits rate): £59.28 per year
- At 25% (main rate): £78 per year
Small, but completely frictionless. Most directors should claim this as a minimum.
Method 2: Apportioned actual costs
Calculate the business proportion of your actual home running costs:
Annual deductible amount = Total annual home costs × (Business rooms ÷ Total rooms)
Worked example — 4-bedroom house, 1 room used for work:
| Cost | Monthly | Annual |
|---|---|---|
| Mortgage interest | £1,100 | £13,200 |
| Council tax | £180 | £2,160 |
| Gas and electricity | £200 | £2,400 |
| Broadband | £45 | £540 |
| Buildings insurance | £50 | £600 |
| Total | £1,575 | £18,900 |
Room ratio: 1 room used for business out of 5 total rooms = 20%. Annual deductible: £18,900 × 20% = £3,780.
Corporation tax saving at 25%: £945. Versus £78 on the flat rate — a difference of £867 per year for minimal additional admin.
The CGT trap and how to avoid it
If a room is used exclusively for business (no personal use at all), it may lose Private Residence Relief when you sell your home. For the 4-bedroom example: if 1 room (20%) is exclusively business, 20% of any capital gain could be subject to CGT.
The fix: ensure your home office is also used personally — a family reading room, children's study space, or occasional personal use. This makes it a shared-use room, preserving full PRR. HMRC's guidance confirms that shared-use rooms do not trigger the PRR restriction.
Which method to choose?
Use the Home Office calculator to compare both methods for your specific home costs. For most directors with a mortgage and normal running costs, the apportioned method produces significantly more than the flat rate. The CGT protection from keeping rooms as shared-use costs nothing.
Related calculators
Frequently asked questions
Note: mortgage capital repayments vs interest
Can I claim more than one room?
Disclaimer: This article is for general information only and does not constitute tax or legal advice. Tax rules change — verify with HMRC or a qualified accountant before making decisions. Published 6 April 2026 for 2026-27.