Common Mistakes to Avoid When Claiming Working From Home Allowance

Working from home has transformed from a temporary pandemic measure into a permanent arrangement for millions of UK workers. With this shift comes an often-overlooked financial benefit: the working from home allowance. Yet despite its potential to save you hundreds of pounds annually, countless people are either missing out entirely or making costly errors in their claims.

If you’ve been working from home, you might be entitled to tax relief that could put money back in your pocket. However, navigating HMRC’s rules can feel like walking through a minefield. One wrong step, and you could face rejected claims, penalties, or worse—having to repay relief you’ve already received.

This comprehensive guide will walk you through the most common mistakes people make when claiming their working from home allowance, ensuring you maximise your entitlement while staying fully compliant with HMRC regulations. Whether you’re an employee, self-employed, or a limited company director, you’ll find practical insights to help you claim correctly.

Understanding the Working From Home Allowance

Before we explore the mistakes, let’s establish what the working from home allowance actually entails. This tax relief helps workers reclaim additional household costs incurred due to remote working, such as heating, electricity, and business telephone calls.

HMRC permits eligible individuals to claim a flat-rate home office allowance of £6 per week, totalling £312 annually. This represents the basic rate most people claim, though there’s also an option to claim actual costs if your expenses exceed this amount.

The relief isn’t a cash payment you receive directly. Instead, it reduces your taxable income, meaning you pay less tax overall. For basic-rate taxpayers, the £312 allowance typically saves around £62.40 per year, while higher-rate taxpayers save approximately £124.80 annually.

What Allowance Can I Claim for Working From Home?

One of the most frequent questions surrounding this benefit relates to exactly what you can claim. The working from home allowance covers additional household expenses that arise specifically because you work from home. Let’s break down your options:

The Flat-Rate Simplified Method

The simplified approach allows you to claim tax relief on £6 per week (£26 per month or £312 per year) without providing detailed evidence of your actual costs. This method offers:

• No requirement to keep receipts or detailed records
• Quick and straightforward claiming process
• Suitable for most home workers whose additional costs are modest
• Automatic calculation through your tax code if claimed via employer

The Actual Costs Method

If your additional household expenses exceed the flat-rate allowance, you can claim the actual amount spent. This covers:

• Heating costs for your workspace
• Electricity used during working hours
• Business telephone calls and internet usage (portion used for work)
• Minor office equipment and supplies

However, you cannot claim relief for costs that would exist regardless of working from home, such as:

• Rent or mortgage payments
• Council tax
• Water rates
• Home insurance
• Existing broadband packages (unless you upgraded specifically for work)

When claiming actual costs, you must calculate the business proportion accurately. If your home office occupies 10% of your property and you work 40 hours per week, you can only claim the proportionate costs for that time and space.

Common Mistake #1: Claiming When You’re Not Eligible

The most fundamental error people make is claiming the working from home allowance when they don’t actually qualify. HMRC has specific eligibility criteria that must be met.

Who Qualifies for Working From Home Allowance?

You can only claim if you’re required to work from home to fulfil your job duties. This means:

• Your job cannot be performed at your employer’s premises
• You work from home regularly, not occasionally
• Your employer doesn’t provide suitable office space
• Home working is a contractual requirement or business necessity

Who Doesn’t Qualify?

Common scenarios where claims fail include:

• Voluntary home working: If you choose to work from home for convenience or preference, but could work at your employer’s office, you’re not eligible
• Occasional home working: Working from home one day per week typically doesn’t qualify
• Hot-desking arrangements: If your employer provides office space that you can use when needed, even on a shared basis, you may not be eligible
• Personal preference: Disliking the commute or preferring your home environment aren’t valid reasons

The key distinction is between choice and necessity. HMRC scrutinises claims carefully, and making an ineligible claim can result in having to repay relief, plus potential penalties.

Common Mistake #2: Double-Claiming with Employer Reimbursements

A frequent pitfall occurs when employees receive home working payments from their employer whilst also claiming tax relief from HMRC. This creates a double-claim situation that violates HMRC regulations.

How Much Can My Employer Pay Me for Working From Home?

Employers can provide a tax-free home working payment of up to £6 per week (£26 monthly or £312 annually) without requiring receipts or justification. This payment:

• Doesn’t appear on your P11D
• Isn’t subject to income tax or National Insurance
• Can be paid alongside your salary
• Covers the same costs as the HMRC allowance

The crucial point: If your employer already pays you a home working allowance, you cannot also claim tax relief from HMRC for the same expenses. You must choose one or the other.

What If Your Employer Pays Less Than £6 Per Week?

If your employer provides, for example, £4 per week, you can claim tax relief on the remaining £2 per week through HMRC. The total from both sources cannot exceed £6 per week for the flat-rate method.

Employer Payments Exceeding £6 Per Week

Some generous employers pay more than the tax-free allowance. If you receive £10 per week, for instance:

• The first £6 per week remains tax-free
• The additional £4 per week becomes taxable income
• You cannot claim any further relief from HMRC

Always check your payslips and P60 to understand what home working payments your employer has made before submitting an HMRC claim.

Common Mistake #3: Claiming for the Wrong Tax Year

Timing confusion causes numerous rejected claims. Understanding tax years and retroactive claiming is essential for maximising your working from home allowance.

Tax Year Boundaries

The UK tax year runs from 6 April to 5 April the following year. When you claim matters significantly:

• Claims for previous years must be submitted separately
• You can backdate claims for up to four previous tax years
• Each tax year requires individual consideration of eligibility

Many people assume they can claim for an entire calendar year, forgetting that if they started working from home in November, they can only claim for November through 5 April in that tax year.

Backdated Claims

If you’ve been working from home for several years but never claimed, you’re potentially missing out on hundreds of pounds. You can submit claims for:

• The current tax year
• Up to four previous tax years

For example, in the current tax year, you could claim back to the 2020/21 tax year, potentially recovering over £300 in tax relief.

However, you must have been eligible during those periods and not received employer reimbursements that covered the same costs.

Common Mistake #4: Providing Insufficient Evidence

When claiming actual costs rather than the flat-rate allowance, inadequate record-keeping frequently leads to rejected claims or HMRC enquiries.

What Evidence Do You Need?

For flat-rate claims, minimal evidence is required. However, for actual costs, you must provide:

• Detailed utility bills showing increased consumption
• Calculations demonstrating the business proportion
• Evidence of your working hours and patterns
• Proof that your employer doesn’t reimburse these costs
• Records of business telephone calls

The Business Proportion Calculation

HMRC expects accurate calculations, not guesstimates. If claiming actual costs, document:

• Total rooms in your property
• Square footage of your workspace
• Hours worked from home per week
• Total household costs for heating, electricity, etc.
• The proportionate business use

For instance, if your home office represents 1 room out of 8 (12.5%), and you work 40 hours out of 168 hours per week (23.8%), your business use proportion would be approximately 3% of total household costs.

Common Mistake #5: Incorrect Claiming Methods

The process of claiming your working from home allowance varies depending on your employment status and circumstances. Using the wrong method delays relief or results in rejection.

Three Ways to Claim

Method 1: Through Your Employer (Fastest)

Your employer can adjust your tax code to account for the £6 weekly allowance. Benefits include:

• Relief applied immediately through payroll
• No need to contact HMRC directly
• Automatic continuation each year

However, this requires employer cooperation, and not all companies offer this service.

Method 2: Online Through Your Personal Tax Account

This straightforward method involves:

• Logging into your Government Gateway account
• Navigating to the employment expenses section
• Completing the work from home relief claim form
• Receiving adjusted tax codes or rebates

Most claims are processed within a few weeks, with relief applied through adjusted tax codes or direct refunds for previous years.

Method 3: Self-Assessment Tax Return

If you already complete Self-Assessment, include your working from home allowance claim within your return. This applies to:

• Self-employed individuals
• Limited company directors
• Those with complex tax affairs

Don’t use multiple methods simultaneously, as this creates confusion and potential double-claiming issues.

How Much is the HMRC Allowance for Use of Home as Office?

Understanding the exact figures available helps you claim correctly and spot underpayments or errors in your relief.

Standard Flat-Rate Allowance

The flat-rate applies regardless of your actual costs, making it ideal for those with modest additional expenses or who prefer simplicity.

Actual Costs Allowance

There’s no upper limit when claiming actual costs, but you must justify every penny. Typical additional costs for home workers include:

• Heating: £15-40 per month (business proportion)
• Electricity: £10-30 per month (business proportion)
• Internet upgrade costs: Variable
• Business calls: As incurred

Calculate carefully whether actual costs exceed £26 monthly before pursuing this more complex claiming method.

Common Mistake #6: Claiming Personal Expenses

A surprisingly common error involves attempting to claim costs that don’t qualify as additional business expenses. HMRC regularly rejects claims that include:

Non-Claimable Expenses

• Mortgage or rent payments: These remain constant whether you work from home or not
• Council tax: No portion can be claimed for employment use
• Standard broadband packages: If you already had internet at home, you can’t claim unless you upgraded specifically for work requirements
• Furniture: Desks, chairs, and office furniture aren’t covered under the working from home allowance (though may qualify under other reliefs)
• Decorating or maintenance: General home upkeep doesn’t qualify
• Tea, coffee, and snacks: Personal sustenance costs aren’t allowable

The “Wholly, Exclusively, and Necessarily” Test

HMRC applies this test to determine eligibility. Your expense must be:

• Wholly: Entirely for business purposes
• Exclusively: Not for private use
• Necessarily: Required to do your job, not just convenient

If any element fails this test, the expense isn’t allowable.

Common Mistake #7: Forgetting to Update Claims When Circumstances Change

Your working from home allowance claim isn’t a “set and forget” situation. Changes in your circumstances require corresponding claim adjustments.

When to Update Your Claim

You must notify HMRC if:

• You return to office working full-time or predominantly
• Your employer starts providing home working payments
• You change jobs or become unemployed
• Your working pattern shifts (e.g., moving from full-time home working to two days per week)
• You switch from employed to self-employed status

Continuing to claim relief when no longer eligible constitutes tax fraud, resulting in repayment demands, penalties, and potential prosecution for serious cases.

Hybrid Working Arrangements

The rise of hybrid working creates claiming complications. If you work three days in the office and two days at home:

• You’re probably not eligible for the flat-rate allowance (as office space is available)
• You might claim for specific additional costs incurred on home working days
• Detailed records become essential

HMRC’s position on hybrid working remains somewhat ambiguous, but generally, having access to office facilities undermines working from home claims unless your employer mandates specific home working days.

What is the Most Overlooked Tax Break?

While the working from home allowance saves many people money, it’s not the most commonly missed tax relief in the UK. That distinction belongs to Marriage Allowance.

Marriage Allowance: The Forgotten Tax Break

Marriage Allowance allows couples to transfer £1,260 of their personal allowance between spouses or civil partners, potentially saving up to £252 annually. Eligibility requires:

• One partner earning less than the personal allowance (currently £12,570)
• The other partner being a basic-rate taxpayer
• Marriage or civil partnership status

Shockingly, around 2.4 million eligible couples don’t claim this benefit, collectively missing out on over £600 million in tax relief each year. Claims can be backdated four years, meaning qualifying couples could receive over £1,000 in retrospective relief.

Other Frequently Overlooked Tax Breaks

Beyond Marriage Allowance and working from home relief, other commonly missed tax breaks include:

Uniform Tax Rebate

If you wear a required uniform or specialist clothing for work, you can claim:

• Flat-rate industry allowances (typically £60-£140 annually)
• Actual washing and maintenance costs
• Backdated claims for four years

Professional Subscription Relief

Annual fees for professional memberships required for your job qualify for tax relief, potentially saving hundreds of pounds for those in professions like accounting, law, or engineering.

Mileage Allowance Relief

If you use your personal vehicle for business travel (not commuting) and your employer doesn’t reimburse at the HMRC rate of 45p per mile (first 10,000 miles), you can claim the difference.

Pension Tax Relief

While better known than others, many people don’t maximise pension contributions, missing significant tax advantages, especially higher-rate taxpayers who can claim additional relief through Self-Assessment.

Common Mistake #8: Misunderstanding Self-Employed vs. Employed Claims

The rules differ substantially between employed and self-employed individuals, yet people frequently apply the wrong claiming procedures.

Employed Individuals

As an employee claiming working from home allowance:

• You’re limited to the additional household costs
• Capital expenses (furniture, equipment) typically aren’t allowable
• Claims go through PAYE or Self-Assessment if you have one
• Employer reimbursements affect eligibility

Self-Employed Workers

Self-employed individuals have broader options:

• Can claim a simplified flat rate based on hours worked (from £10-26 per month)
• Alternative: calculate actual costs using detailed records
• Office equipment and furniture may qualify as capital allowances
• Claims made through Self-Assessment tax returns
• More flexibility but greater record-keeping requirements

Limited Company Directors

Directors occupy a unique position:

• Can claim as employees if working from home is contractually required
• Company can reimburse home working costs as a business expense
• Must avoid benefit-in-kind issues
• Professional advice often beneficial given complexity

Common Mistake #9: Ignoring Regional Variations and Special Circumstances

Whilst HMRC rules apply UK-wide, certain circumstances require special consideration.

Scottish Taxpayers

Scottish income tax rates differ from the rest of the UK, affecting the value of tax relief:

• Starter rate (19%): £62 savings on £6 weekly allowance becomes £59.28
• Basic rate (20%): Standard calculation applies
• Intermediate rate (21%): Higher relief than standard basic rate
• Higher and top rates: Correspondingly increased relief

Calculate your actual tax savings based on your specific Scottish tax band.

Multiple Jobs

Working from home for multiple employers creates claiming complications:

• You can potentially claim for each employment where you meet eligibility criteria
• Keep separate records for each job
• Be prepared to justify claims if HMRC queries them
• Ensure no overlap in claimed expenses

Temporary Changes in Circumstances

The pandemic created unprecedented claiming situations. As normality returns:

• Emergency pandemic arrangements no longer apply
• “Work from home if you can” guidance has ended
• Historical claims for pandemic periods remain valid if eligible at the time
• Current claims must meet standard eligibility tests

Common Mistake #10: Failing to Keep Adequate Records

Even when claiming the simple flat-rate allowance, maintaining basic records protects you from future HMRC queries.

What Records Should You Keep?

At minimum, retain:

• Written confirmation of home working requirements from your employer
• Employment contracts showing home-based work
• Records of claim submissions and HMRC responses
• Payslips showing any employer home working payments
• Correspondence regarding changes in working arrangements

For actual costs claims, keep:

• Utility bills for the claimed period
• Detailed calculations of business proportion
• Receipts for claimable expenses
• Evidence of business telephone usage
• Floor plans showing workspace if relevant

How Long to Keep Records

HMRC requires record retention for:

• Five years for standard claims
• Twenty-two months after the end of the tax year for simple flat-rate claims through PAYE
• Six years for Self-Assessment records

Don’t dispose of documents prematurely, as HMRC can investigate historical claims if they suspect errors or fraud.

Maximising Your Working From Home Allowance Legitimately

Now that we’ve covered the mistakes to avoid, let’s focus on legitimate ways to optimise your claim.

Annual Reviews

Each tax year, review your situation:

• Has your working pattern changed?
• Are you still eligible for relief?
• Should you switch between flat-rate and actual costs?
• Have you claimed for previous years?

Accurate Calculations

Take time to calculate whether actual costs exceed the flat-rate allowance. While £6 weekly seems modest, it’s tax-free and hassle-free for many people. Only pursue actual costs claims if your additional expenses genuinely exceed £26 monthly.

Communication with Employers

Discuss with your employer:

• Whether they’ll adjust your tax code for immediate relief
• If they provide home working payments
• Written confirmation of home working requirements
• Changes to working arrangements

Clear employer communication prevents claiming errors and ensures you receive maximum entitled relief.

Professional Advice for Complex Situations

Consider consulting an accountant or tax adviser if you’re:

• Self-employed with significant home working expenses
• A limited company director
• Claiming substantial actual costs
• Uncertain about eligibility
• Facing an HMRC enquiry

Professional fees often prove worthwhile when substantial amounts are at stake.

What to Do If You’ve Made a Mistake

Discovering you’ve claimed incorrectly can be worrying, but prompt action minimises consequences.

Voluntary Disclosure

If you’ve overclaimed or claimed when ineligible:

• Contact HMRC immediately
• Explain the error honestly
• Offer to repay any excess relief
• Provide corrected information

HMRC treats voluntary disclosures more favourably than discovered errors, potentially avoiding penalties.

Underclaiming

If you’ve claimed less than entitled:

• Submit amended claims for affected tax years
• Include supporting documentation
• Clearly explain the correction

You can generally amend claims within four years of the tax year end.

HMRC Enquiries

If HMRC questions your claim:

• Respond promptly with requested information
• Provide all supporting evidence
• Be honest about any uncertainties
• Consider professional representation for complex disputes

Most enquiries result from genuine mistakes rather than deliberate fraud, and cooperative responses typically resolve matters satisfactorily.

Future Changes to Working From Home Allowance

Tax rules evolve constantly. Stay informed about potential changes by:

• Regularly checking HMRC guidance updates
• Following budget announcements
• Reviewing your personal tax account periodically
• Subscribing to reliable tax information sources

The Treasury periodically reviews tax reliefs, and working from home provisions may change as remote working patterns stabilise post-pandemic.

Conclusion: Claim Smartly, Stay Compliant

The working from home allowance represents valuable tax relief for eligible workers, potentially saving hundreds of pounds over several years. However, as we’ve explored, numerous pitfalls await the unwary claimer.

By avoiding these common mistakes, you’ll ensure your claims succeed whilst maintaining full HMRC compliance:

• Verify your eligibility before claiming
• Understand the interaction between employer payments and tax relief
• Choose the appropriate claiming method for your circumstances
• Keep adequate records even for simple claims
• Update HMRC when situations change
• Don’t claim personal expenses as business costs
• Remember to claim for previous eligible years

Working from home has transformed how millions of people work in the UK. Whether you’re a full-time remote worker or have hybrid arrangements, understanding your entitlements ensures you don’t leave money on the table whilst avoiding costly compliance errors.

Take action today: review your working arrangements, determine your eligibility, and submit any outstanding claims. Your household budget will thank you, and you’ll have peace of mind knowing you’ve claimed correctly and compliantly.

Remember, tax relief exists to support workers bearing additional costs for their employment. By claiming correctly, you’re simply receiving the support parliament intended when creating these provisions. Don’t let common mistakes prevent you from accessing your rightful tax relief.