HMRC internal manual

Employment Income Manual

EIM32820 - Other expenses: home: household expenses: expenses that are not deductible

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Section 336 ITEPA 2003

The guidance on this page applies for 2006/07 onwards. For 2005/06 and earlier years it was HMRC practice to include council tax, and rent, in the expenses qualifying for relief. For detailed guidance on the approach to be adopted for 2005/06 and earlier years, see SE32810 onwards.

For 2006/07 onwards, the following expenses are not deductible in any circumstances.

Council Tax/rates

This is a flat rate charge which the employee has to pay irrespective of whether they work at home or not. No part of it is paid wholly and exclusively in the performance oftheir employment duties.


As for Council Tax.

Water rates

Water rates are a flat charge. So no part of the charge can be said to be incurred exclusively for business use. Where a water meter is used, see EIM32815.

Mortgage interest/endowment premiums

Mortgage interest is a cost of borrowing money and not a cost of providing business accommodation. The case of Baird v Williams (71TC390) confirms that it is not a deductible expense. For the same reason endowment premiums relating to the mortgage are not deductible.


No deduction is due for the cost of insuring the property or any of its contents. It is not a cost that is incurred in carrying out the duties of the employment. It is an expense to save a later potential expense.