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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Simplified expenses: use of home for business purposes

S94H ITTOIA 2005

Where a home is used partly for business purposes, the simplified expenses rules allow a flat rate deduction for household running costs listed at BIM47820. The deduction is based on the number of hours spent wholly and exclusively on core business activities in the home, and is only available if these hours exceed 25 per month.

Core business activities comprise:

  • Providing goods and/or services
  • Maintaining business records
  • Marketing and obtaining new business

Use of the flat rate deduction is optional, whether the business has also opted to use the cash basis or not. Alternatively, the business can identify and claim the trade proportion of actual costs (see BIM47800+).

Use of the flat rate deduction for household running costs does not prohibit a separate deduction for fixed costs such as council tax (or domestic rates in Northern Ireland), insurance and mortgage interest, where an identifiable proportion can be attributed to business use. See BIM47820 and BIM47825 for further guidance and examples.

The flat rates are as follows:

Number of hours worked Flat rate per month
25 or more £10
51 or more £18
101 or more £26

The deduction for a period is the sum of the flat rates for each month, or part of a month, falling within that period.

Use of the flat rate deduction also does not prohibit a separate deduction for telephone and broadband/internet connection costs. See BIM47820 for information on how to work out the business proportion of these costs. Note that if the private use is not significant the full cost of the telephone and broadband service can be claimed as a business expense.

More than one home

If a person has more than one home, they are treated as a single home for the purposes of calculating hours worked.


If two or more partners in the trade share a homw only one deduction is available in calculating the partnership profits. Where the partners work different hours, the flat rate deduction is based on the aggregate hours worked and no hour is counted more than once. Where patners occupy different homes all partners homes are to be treated in the same way. Only partnerships comprising solely individual partners can claim this simplified expenses.