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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Specific deductions: use of home: wholly & exclusively

S34 Income Tax (Trading and Other Income) Act 2005

Tax law says that an expense is only allowable as a deduction if it is incurred ‘wholly and exclusively for the purposes of the trade’. If an expense is incurred for more than one purpose, this rule does not prohibit a deduction for any identifiable part or identifiable proportion of the expense which is incurred wholly and exclusively for the purposes of the trade.

This page explains what is meant by part of the home being used ‘wholly and exclusively’ for trade purposes. If you need a more detailed review of the meaning of wholly and exclusively see BIM37000 onwards.

Wholly and exclusively does not mean that:

  • trade expenditure must be separately billed, or
  • part of the home must be permanently used for trade purposes and not used for any other purpose at any other time.

Wholly and exclusively does mean that when part of the home is being used for the trade then that is the sole use for that part at that time. Thus if the part of the home used for trade purposes is also, at the same time, used for some other non-trade purpose, no deduction is due.

The question is whether there are periods when part of the home is being used solely for trade purposes. If part of the self-employed person’s home is set aside solely for trade use for a period, they can claim as a deduction the costs they incurred on that part during that period. It will be most unlikely that they have a separate bill for that specific part and usually this exercise will involve apportioning the total relevant bill between the period of solely trade use and the remainder of the time covered by the expense.