What is the flat rate deduction for use of home as office?
Answered 17 March 2026
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Flat Rate Deduction for Use of Home as Office
What the law says
The flat rate deduction for use of home for business purposes is provided under s.94H ITTOIA 2005 (as part of the simplified expenses scheme for trading income). The deduction is based on the number of hours spent wholly and exclusively on qualifying work in the home each month:
| Hours worked per month | Applicable amount |
|---|---|
| 25 or more | £10.00 |
| 51 or more | £18.00 |
| 101 or more | £26.00 |
"Qualifying work" means work done by the person (or any employee, or, where the person is a firm, a partner or employee of the firm) in the home wholly and exclusively for the purposes of the trade.
Key rules:
- Where more than one person does qualifying work in the same home at the same time, any hour is counted only once.
- If the person has more than one home, the section applies as if those homes were a single home.
- The Treasury may amend the rates or rate bands by regulations.
- This flat rate is an alternative to the "standard deduction" (i.e. the actual apportioned costs method) — the taxpayer elects one or the other.
HMRC guidance / practice
- HMRC confirms the flat rate deduction is available under the simplified expenses scheme (referenced at BIM75010) as an alternative to calculating the actual business proportion of household running costs.
- Once a taxpayer has chosen the flat rate and the deadline for amending the return has passed, they cannot claim overpayment relief simply because the actual costs method would have produced a lower tax bill. HMRC's example illustrates a sole trader who used £26 per month (the 101+ hours band) and could not later switch to actual costs.
In summary: The flat rate is £10/month (25–50 hrs), £18/month (51–100 hrs), or £26/month (101+ hrs). It is only available to the self-employed under the simplified expenses rules and cannot be combined with the actual apportionment method for the same period.
Citation sources
on for a period under this section in respect of the use of a partner's home for the purposes of a trade, the only deduction which the firm may make for the period in respect of the use of any other partner's home for those purposes is a deduction under this section. 6 The Treasury may by regulations amend subsection (4) so as to alter the rates or rate bands.
A person may make a choice between alternatives allowable under the Taxes Acts which, with hindsight, leads them to pay more tax than they would have done had they made a different choice. This does not mean that the tax was not due. Example Simon is a sole trader who runs his business from an office in his home. Under the simplified expenses rules (BIM75010) he used a flat rate deduction of £26 per month to cover the use of his home for business purposes in his 2013/14 return. After the deadlin
A deduction in respect of the business use of the subcontractor’s home depends on the nature and the extent of any business activity being carried on there (see BIM37665). If significant business activity is carried out in the home, a deduction will normally be due. But such a deduction is only due where the subcontractor can show that a definite part or proportion of their home is being used for business purposes. See BIM37650 for guidance on how expenditure should be apportioned in these circu