Bill Your Company for
Home Office Space Use £

The modern business landscape often blurs the lines between personal and professional spaces.

For directors who find themselves in a position where their home doubles as their workspace, the question arises: Can you charge your company rent for this dual use?

Home office space

(Read Time: Approx. 3 minutes)

Topics Discussed:

  • Exploring the viability of directors charging rent to their companies for home office space, including HMRC-approved allowances and actual cost claims.

  • Navigating tax implications and responsibilities for directors operating a home-based office, including capital allowances, VAT reclamation on building works, and tax specifics introduced since April 2017.

When Home Becomes the Boardroom

Directors may need to perform a significant portion of their duties from home or even base their company there. In such scenarios, there are three avenues to consider:

  1. Home-working Allowance
    HMRC approves a home-working allowance of £6 per week, up from £4 per week since April 6, 2020. This allowance is a straightforward way to cover some of your home office costs without needing to itemise expenses.
  2. Actual Costs
    For those with more significant home office expenditures, claiming actual costs could be more beneficial. This can include metered utilities like light and heat, business calls on your home phone, and a portion of your internet service provider or broadband costs. Even a proportionate share of cleaning expenses for your workspace could be claimable, especially if your line of work necessitates a pristine environment.
  3. Licence Agreement Path
    Alternatively, you could formalise an arrangement with your company for a dedicated part of your home. By establishing a license agreement, the company pays you rent, which then becomes claimable as an expense on your Self-Assessment.

What’s Not Covered

It’s crucial to remember that not all home-based costs are reclaimable.

Mortgage interest or rent, water rates, and unreceipted expenses such as cash payments to a cleaner fall outside the scope of reclaimable costs.

Now, let’s look at what is covered.

Capital Allowances and Company-Provided Equipment

If you’re investing in business equipment, capital allowances on these costs can be claimed.

Your company can furnish you with the necessary tools for your job, with certain items like mobile phones and computer equipment available tax-free.

However, a ‘use of asset’ tax benefit charge can be levied if an employer-provided asset is used privately.

To avoid this, employers should establish explicit usage restrictions in writing.

For items like furniture that could be used privately, ensuring that the home office remains distinctly separate from the living space is advisable.

VAT Reclamation on Building Works

Your company may be eligible to reclaim VAT on certain building works done to your property.

Yet, tread carefully, as any personal benefit can obstruct this claim.

It’s a delicate balance between company ownership and personal use, and the tax implications thereof.

Examples of where this VAT reclamation would apply is a loft conversion, to a home office for a sole trader to work from home.

If HMRC is informed well in advance, and it’s clear this office is going to be only for working use, it may be claimable.

Stepping into a Landlord’s Shoes

Opting to charge rent puts you into the role of a landlord, operating a commercial property venture.

This transition brings about certain responsibilities:

  • A portion of your overheads and variable costs becomes claimable.
  • The Land and Property section of your tax return must reflect this rental income, ensuring transparency and compliance.


Directors utilising a portion of their home as an office can navigate the tax landscape with precision by understanding what is and isn’t permissible to claim.

The aim is to strike a balance between legitimate business expenses and personal use, ensuring tax compliance while maximising the benefits of a home office setup.

At Tax Expert, we’re dedicated to guiding you through the details of tax-efficient home office management.

Reach out for bespoke advice tailored to your unique situation and let us help you harmonise your workspace with your tax obligations seamlessly.

Contact us today at 01772 788200 to find out more about how we can help, or WhatsApp us out-of-hours at 07787 010190.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards,

Ilyas Patel