Working From Home as a Director: What Your Limited Company Can Claim in 2026

Bottom line: From 6 April 2026, directors and employees can no longer claim working from home tax relief through Self Assessment or their personal tax code. All claims must now go through the limited company. If you've been relying on a personal claim, you need to switch to one of the three company-based methods — or you're leaving money unclaimed.

What changed on 6 April 2026

Until 5 April 2026, UK employees (including working directors) could claim a £6/week tax relief for working from home by contacting HMRC directly or through their Self Assessment return. From 6 April 2026, HMRC abolished this personal route entirely. The only way to claim WFH costs in 2026-27 and beyond is through your employer — which for a solo director means through your limited company.

This change affects any director who has been making personal claims. It does not affect directors who were already claiming through the company (the company-based methods have always existed and remain unchanged). The practical effect: switch from your personal claim to a company expense, and you may actually end up better off — the company methods can produce a larger deduction.

The three methods for limited company directors

Method 1: The flat rate allowance (£6/week)

Your limited company pays you a weekly allowance of £6 (£312 per year) as reimbursement for home office costs. This payment is tax-free in your hands (no income tax, no NI) and is a deductible expense for the company.

Corporation tax saving: £312 × 19% = £59.28/year (at the small profits rate). Not significant — but it takes five minutes to set up and requires no ongoing tracking.

How to implement: Add the allowance to your payroll or pay it as a separate company reimbursement. Keep a record of the basis for payment (the HMRC flat rate).

Best for: Directors who work from home occasionally, not full-time, or who want zero administration.

Method 2: The actual cost (apportioned) method

Your company reimburses you for a proportionate share of your home running costs — based on the number of rooms used for work and the proportion of time the space is used for business.

What you can apportion:

• Electricity and gas (heating and lighting the workspace)
• Broadband (business proportion only)
• Water rates (minor element)
• Home insurance (if covers business equipment)

What you cannot apportion:

• Mortgage interest or capital repayments
• Rent
• Council tax
• General maintenance

Worked example: A director works full-time from home in a 5-room house (4 bedrooms + living room; kitchen excluded from the count). Their room ratio is 1/5 (20%). They work approximately 230 days per year, out of 365 (63%). Annual utility and broadband bills total £3,600.

Claimable proportion: £3,600 × 20% × 63% = £453.60/year. Corporation tax saving at 19%: £86.18. This is 45% more than the flat rate method on similar numbers — and scales significantly with higher bills or larger usage.

How to implement: Collect annual utility and broadband bills. Calculate the room and time ratio. Pay the reimbursement from the company account. Keep the calculation and supporting bills as records.

Best for: Directors who work from home full-time or near full-time and have material utility costs.

Method 3: A formal rental agreement

Your limited company enters a formal rental agreement with you personally to rent office space within your home. The company pays you rent; you declare it as rental income on your Self Assessment but can offset the same costs against it, typically producing a small personal tax liability or breakeven while generating a larger corporation tax deduction.

How it works:

• The company and you (as an individual) sign a commercial licence agreement specifying the space, rent amount, and terms
• The company pays the rent — fully deductible for corporation tax purposes
• You declare the rental income on your Self Assessment and deduct the running costs of that space against it
• If the deductible costs equal or exceed the rental income, the net personal tax effect is minimal

The CGT risk to avoid: If you own your home and designate a room exclusively and permanently for business use, HMRC may treat that room as a business asset — which could attract capital gains tax when you sell the property. The standard way to avoid this: ensure the room is not used exclusively for business (occasional personal use preserves its residential character). Use a licence agreement rather than a lease — the former conveys less permanence.

How much can the company pay? The rent must be set at a commercial rate for the space being used. A reasonable basis: market rate per square foot for commercial office space in your area, applied to the square footage of your dedicated workspace. Typical figures: £300–£800/month depending on location and space size.

Best for: Directors with sufficient home workspace to justify a formal commercial arrangement and who have taken professional advice on the CGT position.

Which method is right for you?

What about equipment?

Computers, monitors, desks, chairs, and other equipment purchased by the limited company for business use are capital allowances claims — entirely separate from the home office running cost claims above. Your company can buy this equipment, claim capital allowances or the Annual Investment Allowance, and the equipment remains a company asset.

Equipment you already own personally and use for business can be rented to the company (similar to the rental agreement approach) or transferred to the company at market value.

Use our Home Office Calculator to estimate your claimable amount under the apportioned method, or our Corporation Tax Calculator to see the CT saving in the context of your overall tax position.