Home Office Expenses for Directors: Flat Rate vs Apportioned

Two methods, one choice

HMRC allows two approaches for directors claiming home office costs through their company:

Flat rate: £6/week (£312/year) — HMRC's simplified method. No receipts required. Available if you work from home for at least 25 hours per month.
Apportioned actual costs — calculates the business proportion of your genuine home running costs based on rooms and hours used.

Flat rate: simple and safe

£312/year is claimed as a company expense. At 19% corporation tax, the saving is £59.28. At 25%, it's £78. Small — but requires zero effort and carries no CGT risk.

Apportioned method: potentially much larger

Take your total annual home running costs (mortgage interest or rent, council tax, utilities, broadband, insurance). Divide by total rooms. Multiply by the number of rooms used for business. This gives your annual deductible amount.

Example: £24,000 annual costs, 6 rooms, 1 used for business = £4,000 deduction. At 25% CT, saving: £1,000. Significantly more than the flat rate.

The CGT risk with exclusive use

If you use a room exclusively for business (never for personal use), it may reduce your Private Residence Relief when you sell your home — triggering CGT on the business-use proportion of any gain. HMRC's flat rate explicitly avoids this. The apportioned method can also avoid it if the room has dual use (personal as well as business).

Most directors use their home office for video calls, emails, and personal tasks too — making it a shared-use room and avoiding the CGT risk.

Frequently asked questions

Can I claim broadband as a home office cost?

Yes, broadband can be included in the apportioned method cost base. If the company pays broadband directly and it is your sole connection (used for both business and personal), the business proportion is claimable. The flat rate covers general running costs including broadband notionally.

What qualifies as 25 hours per month for the flat rate?

Hours spent working from home — not hours available to work. Keep a simple log if you want to evidence this. Most directors working primarily from home exceed 25 hours easily.

Can I claim more than one room?

Yes. If you genuinely use two rooms for business purposes, include both in the apportioned calculation. The proportion becomes 2/total rooms rather than 1/total rooms.