Working From Home Through Your Limited Company: Are You Claiming It Properly?
Working from home has become the norm for many business owners. Whether you run your business from a spare room, a home office, or even a dedicated workspace, your home is supporting your company.
But many directors miss an important point. If your home is being used for business, your company may be able to compensate you for that use.
When set up correctly, this can be a legitimate and tax efficient way to recognise the cost of using your home for business purposes. When done incorrectly, it can either be missed entirely or create unnecessary complications.
Why Working From Home Can Be Claimed
If you are running your limited company from home, you are effectively allowing the business to use part of your personal property.
This means certain costs connected to your home may have a business element. HMRC allows businesses to recognise this in specific ways, provided it is structured properly and supported with records.
The key point is that any claim must reflect genuine business use.
The Two Common Approaches
There are generally two ways directors claim working from home costs through their company.
One option is to use the HMRC flat rate allowance. This is a simple approach where the company reimburses you a fixed weekly amount for working from home. It is easy to apply and requires minimal administration.
The second option involves calculating a proportion of your household costs based on how much of your home is used for business and how often it is used.
This can include a share of expenses such as:
Electricity and heating
Internet and phone usage
Council tax
Rent or mortgage interest
Home insurance
This method can sometimes result in a larger claim, but it requires clearer calculations and documentation.
Why Structure Matters
Working from home expenses should not be treated casually. The claim needs to be structured correctly and recorded properly in your company accounts.
If the claim is too aggressive or poorly documented, it could be challenged by HMRC. If it is ignored completely, you may be missing legitimate tax relief.
Getting the balance right ensures the claim is compliant while still benefiting you as a director.
The Importance of Documentation
Whatever approach you use, documentation matters.
Your company should have a clear record showing:
That you work from home
How the claim has been calculated
Evidence of relevant costs if using the proportional method
Proper bookkeeping entries for reimbursements
Good records protect you if HMRC ever reviews your accounts.
Why Many Directors Miss This
A surprising number of company directors never claim anything for working from home. Others claim amounts without understanding the rules.
This usually happens because the topic is overlooked when the company is first set up or because the director assumes the claim is too small to bother with.
Over time, however, these small amounts add up.
The Bottom Line
If your home is supporting your business, it is worth making sure the arrangement is set up properly.
Claiming working from home costs is not about pushing boundaries. It is about recognising genuine business use and structuring it correctly.
If you are not sure whether your setup is correct or whether you are claiming the right amount, feel free to get in touch. We are happy to review it and make sure everything is handled properly.
Meet Lewis
Lewis is a professional accountant and founder of Rhombus Accounting. He regularly shares his knowledge and best advice here on his blog and on other channels such as LinkedIn.
Book a call today to learn more about what Lewis and Rhombus Accounting can do for you.
