Business & Work From Home: What UK Entrepreneurs and Employees Can Actually Claim in 2026

By ADMIN

On October 23, 2026

At 6:03 am

In Blog

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Business & work from home: the short answer

If you work from home in the UK, what you can claim depends on your status. Employees whose employer requires them to work at home can receive a tax-free allowance of £6 a week (£312 a year) from their employer, but from 6 April 2026 employees will no longer be able to claim working from home tax relief through Self Assessment, according to GOV.UK. Sole traders and company directors follow different rules entirely, and getting them right from the start saves both money and hassle.

This guide walks through the practical side of business and work from home life in the UK: the tax reliefs that still apply, the evidence you need, the honest ways people earn money from a home desk, and the red flags to avoid. No income promises, just the facts.

Key takeaways

From the 2026/27 tax year (6 April 2026 to 5 April 2027), employees cannot claim working from home tax relief, but claims can still be backdated for the four previous tax years (GOV.UK).
Employees can only claim if they are required to work from home, not if they simply choose to.
Self-employed people may be able to claim a proportion of actual household costs, or a simplified flat rate depending on hours worked at home; check the current HMRC rules for the latest figures.
Only work-related costs qualify; rent and broadband for mixed private and business use cannot be claimed by employees (GOV.UK).
Legitimate home-based work exists, transcription, customer service, data entry, but beware of any “opportunity” that demands upfront fees or promises specific earnings.

Can employees still claim tax relief for working from home?

Yes, but the window is closing. According to GOV.UK, for the tax year 6 April 2026 to 5 April 2027 you will not be able to claim tax relief for working from home as an employee. You can still claim for the four previous tax years, so if you were eligible in 2022/23 onwards and never claimed, it may still be worth doing.

The key condition is that you must work from home because your job requires it, for example, because your role means you live far from your office. You cannot claim if working from home is simply your choice, including cases where your contract lets you work remotely some or all of the time, or where your employer has an office you sometimes cannot use because it is full.

What the relief is worth

Tax relief is based on your tax rate. If you pay the 20% basic rate and claim relief on £6 a week, you receive £1.20 per week in tax relief, 20% of £6 (GOV.UK). It is not a payment of £6; it is relief worth a fraction of that, which is a common misunderstanding.

Note that if you complete a Self Assessment tax return, you must claim through your return rather than the standard route (GOV.UK).

What counts as an allowable home working expense?

The rules here are narrower than many people expect. HMRC’s internal manual (EIM32815) states that relief is only allowed for the additional costs of working, specifically:

the additional unit costs of gas and electricity consumed while a room is used for work
the metered cost of water used in the performance of your duties, if any
the unit costs of business telephone calls, including dial-up internet access

Crucially, you cannot claim for things you use for both private and business purposes, such as rent or broadband access (GOV.UK). You can only claim for things to do with your work.

The evidence you need

If you claim £6 a week for the 2022/23 tax year or later, you must send evidence that you have to work from home. If you claim the exact amount you have spent instead, you will also need evidence such as receipts or bills (GOV.UK). Keep your paperwork organised from day one; it makes any claim far simpler.

What about the employer-paid allowance instead?

There is an alternative route that survives the 2026 change. If your employer asks you to work from home, they can pay you a tax-free allowance to cover additional costs. According to Your Tax Help, the approved rate for 2026/27 is £6 per week (£312 per year) with no receipts required, though this figure is not confirmed on GOV.UK and you should check the current rules with HMRC or an accountant.

This comes out of the employer’s pocket rather than the tax system, so it depends entirely on your employer being willing. If you work for a small business or you are a director of your own limited company, this route may be worth discussing. Your Tax Help also suggests limited company directors may be able to take the £6 weekly payment through the company plus documented extra costs, but this is not covered by the official GOV.UK guidance, so take professional advice before relying on it.

How do the rules differ for sole traders running a business from home?

If you are self-employed, the employee rules do not apply to you at all, and in some ways the picture is better. Sole traders can use a simplified flat rate of £10, £18 or £26 a month depending on how many hours they work from home, or claim a proportion of actual home costs, which often gives a larger figure (Your Tax Help).

Choosing between flat rate and actual costs

The flat rate is simple and requires minimal record-keeping. Claiming a proportion of actual costs (a share of your energy bills based on rooms and hours used) can be worth more, but it demands accurate records and a sensible calculation method. If you are just starting a side hustle from your kitchen table, the flat rate is usually the easiest place to begin; you can revisit your approach as the business grows.

Whichever route you pick, the same principle applies: claim only the business proportion, keep evidence, and be consistent year to year.

What are realistic ways to earn money from home in the UK?

Once the tax side is sorted, the bigger question for most readers of this site is how to actually make money from a home base, ideally without much upfront investment. The honest answer: there are genuine options, but they pay for work done, not for signing up. Here are three of the most accessible.

Transcription

Transcription involves typing up audio files, interviews, meetings, podcasts, and pays per audio minute or hour of work. It suits fast, accurate typists and requires little more than a laptop, headphones and free software to start. We cover how it works and what beginners can realistically expect in our guide to transcription work from home.

Remote customer service

Many companies hire home-based customer service agents, and advertised roles often fall in the $15-25/hour range. It is structured employment rather than freelancing, which means steadier hours and a predictable payslip, useful if you are building a business on the side. See our overview of remote customer service jobs for what these roles typically involve.

Data entry

Data entry is the classic entry-level home job: low barrier, flexible, but modest pay and plenty of scams mixed in with the genuine listings. Our guide to data entry jobs from home explains how to separate the real opportunities from the noise.

One other option readers sometimes ask about is live chat support work, which involves answering customer queries by text rather than phone. If that interests you, look for roles advertised directly by employers or on reputable job boards, and be wary of any programme that charges an upfront fee: most people who buy products like this do not earn significant money, and any outcome depends on your own effort and the work actually available.

How do you spot work-from-home scams?

The work-from-home space attracts more than its fair share of dubious offers. The Home Business Alliance (homebusiness.org.uk) exists partly to provide unbiased reviews of home business opportunities and help people avoid scams, a useful sign that checking independent sources before paying anyone is standard, sensible practice.

Some warning signs to watch for:

Upfront fees for “starter kits” or training: genuine employers pay you, not the other way round.
Guaranteed earnings claims: no legitimate employer or platform can promise you a specific income; results always depend on work available and your own effort.
Vague job descriptions that focus on recruiting others rather than doing actual work.
Pressure to act quickly or pay by untraceable methods.

If an offer sounds too good to be true, search for independent reviews before handing over any money or personal details.

What should you set up before starting a home business?

A few practical steps will keep you on the right side of HMRC and make life easier:

Register appropriately. If you are self-employed and earning, you will likely need to register for Self Assessment. If you are employed and claiming backdated home working relief, do it through the correct route for your situation.
Keep records from day one. Receipts, bills, and a simple log of hours worked at home support both sole trader claims and any employee claims.
Separate business and personal money where you can; even a second current account makes bookkeeping far less painful.
Check your home setup. A reliable desk, decent lighting and quiet space matter more than expensive equipment when you are starting on a small budget.

For the employee route specifically, remember the deadline logic: claims can be made for the current tax year (before 6 April 2026) and the four previous tax years, but not for 2026/27 onwards (GOV.UK).

FAQ

Can I claim working from home tax relief if I choose to work from home?

No. GOV.UK is clear that you cannot claim if working from home is your choice, including where your contract allows remote work or where the office is sometimes full. You must be required to work at home because of your job.

How much is the working from home tax relief worth?

Relief is given at your tax rate. A basic rate (20%) taxpayer claiming on £6 a week receives £1.20 a week in relief, not £6. Higher rate taxpayers would receive proportionally more.

What is changing in April 2026?

From 6 April 2026 to 5 April 2027, employees will not be able to claim working from home tax relief at all. Claims can still be made for the four previous tax years. The employer-paid £6 weekly allowance remains an option where employers offer it (Your Tax Help).

Can I claim for my broadband or rent?

Not as an employee. GOV.UK states you cannot claim for things used for both private and business use, such as rent or broadband access. Sole traders, however, can claim a business proportion of household costs under different rules.

What is the easiest way to start earning from home with little money?

Service work is usually the lowest-cost entry point: transcription, data entry and remote customer service all require little more than a computer and internet connection. Expect to build up slowly, and avoid anything asking for upfront payment or promising fixed earnings.

Final thoughts

Working from home in the UK comes with genuine tax considerations, but they are manageable once you know which category you fall into: employee, sole trader or company director. The 2026 change removes one route for employees, so if you were eligible in previous years, check whether a backdated claim makes sense before the window closes further.

If your goal is to build income from home rather than claim relief on a day job, start with a low-cost service skill and grow from there. Our guide to data entry jobs from home is a sensible next read if you want a straightforward starting point.

Sources

Results vary. Nothing here is a promise or guarantee of earnings: what you make depends on your own effort, skills, market and circumstances.

home office, side hustle, small business, UK tax relief, work from home