Can I Work From Home Through My Limited Company?

Since remote working became increasingly common, one of the questions accountants hear most often is:

“What can my limited company pay for if I work from home?”

Some directors assume they can put part of their mortgage through the company.

Others believe every household bill becomes tax-deductible as soon as they start answering emails from a home office.

Neither assumption is correct.

The rules surrounding homeworking can be confusing because several different tax issues may be involved, including:

• Income Tax
• Corporation Tax
• National Insurance
• VAT
• Benefits in kind
• Capital Gains Tax
• Business rates

Getting the treatment wrong can result in personal expenses being incorrectly claimed through the company or unexpected tax charges for the director.

Getting it right allows the company to meet genuine business costs, provide suitable equipment and reimburse certain additional household expenses while remaining compliant with HMRC’s rules.

This guide explains what company directors need to know about working from home during the 2026/27 tax year.

The short answer

Yes, you can operate your limited company entirely or partly from home.

Your company can normally pay for genuine business costs such as:

• Computers and monitors
• Office furniture
• Business software
• Stationery
• A qualifying company mobile phone
• Business telephone calls
• Certain broadband costs
• Additional household costs caused by regular homeworking

The company may also pay you up to £6 per week or £26 per month towards qualifying additional household costs where you regularly work from home under an agreed homeworking arrangement.

This payment can normally be made without you having to provide evidence of the actual additional cost.

If the company pays more than the guideline amount, it should retain evidence showing that the payment does not exceed the additional household costs you actually incurred.

The company cannot normally pay your mortgage, Council Tax or ordinary household bills tax-free simply because you work from home.

Each cost must be considered individually.

What changed from 6 April 2026?

An important distinction applies during the 2026/27 tax year.

From 6 April 2026, employees and directors can no longer claim Income Tax relief directly from HMRC for additional homeworking costs that their employer has not reimbursed.

This means a director cannot simply pay the costs personally and then claim a homeworking deduction from HMRC for 2026/27.

However, the separate exemption for payments made by employers remains available.

Your limited company may therefore continue to reimburse qualifying additional homeworking costs without deducting Income Tax or National Insurance, provided the relevant conditions are met.

The company can normally:

• Pay £6 per week without requiring evidence of the additional costs
• Pay £26 per month where the director is paid monthly
• Reimburse a higher amount where actual additional costs can be supported
• Provide qualifying equipment and supplies
• Reimburse certain qualifying homeworking equipment from 6 April 2026

Merranti’s guide to the 2026 changes to work-from-home tax relief explains the distinction between employee claims and employer reimbursements.

Why does HMRC treat homeworking differently?

Your home is primarily a private residence.

Many of its costs would continue whether or not you operated a business from it.

These may include:

• Mortgage repayments
• Rent
• Council Tax
• Home insurance
• Water rates
• Television subscriptions
• Basic broadband charges
• General repairs
• Household maintenance

HMRC therefore distinguishes between:

1. Normal personal living costs that already existed
2. Additional expenses caused by carrying out employment duties at home

The company can generally reimburse reasonable additional costs.

It cannot normally take over expenses that remain fundamentally personal.

Can my company pay me £6 per week for working from home?

Potentially, yes.

Where you regularly work at home under an arrangement agreed with your company, the company may normally pay:

• £6 per week, or
• £26 per month for a monthly-paid director or employee

The payment is intended to cover reasonable additional household expenses caused by working from home.

The company does not normally need receipts or calculations where it pays no more than the guideline amount.

For a full tax year, £6 per week would amount to:

£6 × 52 weeks = £312

The company should document the arrangement, even where the director owns and controls the company.

Useful evidence may include:

• A homeworking agreement
• A director’s service agreement
• A board minute
• Details of the normal working arrangements
• Payroll or expense records
• Proof of the payments

The payment should be recorded separately from salary and dividends.

What does the £6 weekly payment cover?

The guideline payment is intended to recognise additional household costs caused by regular homeworking.

These may include an increase in:

• Heating
• Electricity
• Metered water use
• Business telephone calls
• Home contents insurance
• Internet costs
• Other reasonable household expenses directly connected with working at home

It does not cover the full cost of those services.

For example, the company should not normally pay the director’s entire electricity bill simply because a laptop and monitor are used at home.

The relevant amount is the additional cost caused by the homeworking arrangement.

Can the company pay more than £6 per week?

Yes, where the actual additional household costs are higher.

However, evidence should be retained to demonstrate how the payment was calculated.

A reasonable calculation might consider:

• Additional heating during working hours
• Electricity used by computers and monitors
• Additional lighting
• Metered water used for business purposes
• Additional insurance costs
• Additional broadband charges
• The number of days worked from home
• The number of rooms used
• The proportion of time the space is used for work

The company should not use a calculation that simply allocates a percentage of every household bill without considering whether the cost actually increased.

The payment must relate to additional costs incurred while carrying out the director’s employment duties.

What home-office expenses can the company usually pay?

Depending on the circumstances, the company may be able to pay for:

• Business computers
• Laptops
• External monitors
• Docking stations
• Keyboards and mice
• Printers and scanners
• Webcams
• Noise-cancelling headsets
• Office desks
• Ergonomic chairs
• Filing cabinets
• Business software
• Cloud subscriptions
• Stationery
• Business postage
• Professional subscriptions
• Business insurance
• Telephone equipment
• A qualifying company mobile phone
• Dedicated business broadband
• Cybersecurity equipment and software

Each purchase should have a clear business purpose and should be reasonable for the company’s requirements.

Merranti’s guide to what counts as a business expense provides a broader explanation of the distinction between allowable business costs and private expenditure.

Can my company buy office furniture?

Yes.

A limited company can normally purchase office furniture and equipment that is required for the director or employee to perform their duties.

This may include:

• An ergonomic office chair
• A desk
• Filing cabinets
• Office storage
• Shelving
• Task lighting
• Computer equipment
• A monitor stand
• A footrest

The company should ideally enter into the purchase and receive the invoice in its own name.

The furniture and equipment will normally remain the property of the company.

This means the director should not automatically treat company-funded office equipment as their personal property.

If the director later keeps an asset after leaving the company, closing the business or replacing the equipment, a tax consequence may arise depending on how the transfer is handled.

Can the company reimburse equipment I purchased?

The rules became more favourable from 6 April 2026.

An employer can now reimburse the cost of certain qualifying homeworking equipment without creating an Income Tax or National Insurance charge where the legislative conditions are met.

This may apply where:

• The equipment is needed for the director or employee to work effectively from home
• The employer would have received an exemption if it had provided the equipment directly
• The reimbursement relates to the actual cost
• The equipment is used in performing employment duties
• Any private use is insignificant

The company should still retain:

• The original receipt
• Evidence of reimbursement
• Details of the business need
• Confirmation of who owns the equipment
• Any company policy governing private use

Although reimbursement may qualify, it is often administratively cleaner for the company to purchase significant equipment directly.

Does private use of company equipment matter?

Potentially.

Company-provided equipment can generally be exempt from a Benefit in Kind charge where:

• The employer’s sole purpose in providing it is to enable the employee or director to perform their duties
• Any private use is insignificant

For example, occasional personal use of a company laptop may not necessarily create a tax charge.

However, purchasing equipment mainly for personal or family use and describing it as a business asset is unlikely to meet the exemption.

The company should have a clear policy stating that equipment is provided primarily for work and that any private use must remain insignificant.

Can my company pay for my broadband?

Possibly, but the treatment depends on the arrangement.

A new broadband connection

Where no broadband connection previously existed and the company pays for a new connection that is required for homeworking and mainly used for business, the cost may qualify for tax-free treatment.

An existing personal broadband contract

If the director already has home broadband for personal use, asking the company to take over the entire monthly bill will not normally produce a tax-free result.

The household would have incurred the basic cost whether or not the director worked from home.

The company may be able to reimburse:

• Identifiable additional business charges
• A business-related upgrade
• A separate business connection
• Costs that arose solely because of employment duties

A dedicated business connection

The cleanest arrangement may be a separate broadband contract taken out by the company and used primarily for business.

The company should consider:

• Whose name is on the contract
• Why the connection was installed
• The level of private use
• Whether the package includes personal entertainment services
• Whether the cost is reasonable for the business

Broadband packages that include television, gaming or entertainment subscriptions require additional care because those elements are clearly personal.

Can my company pay for electricity and heating?

The company can normally contribute towards the additional electricity, heating and lighting costs caused by regular homeworking.

This can be dealt with through:

• The £6 weekly guideline payment
• The £26 monthly guideline payment
• Reimbursement of a higher evidenced amount

The company should not ordinarily pay the full household utility bills.

A calculation for actual costs should be reasonable and reflect:

• The equipment used
• The hours worked
• The additional heating required
• The area used
• The period of business use
• Any existing fixed charges that would have been paid anyway

Standing charges and normal domestic consumption are less likely to represent additional employment costs.

Can my company pay my mortgage?

Generally, no.

Mortgage repayments are a personal cost arising from owning the property.

They do not become a company expense simply because the director works from a spare bedroom or home office.

The company should not normally pay:

• Mortgage capital repayments
• Personal mortgage interest
• Early repayment charges
• Residential mortgage fees

There is a separate possibility of charging the company rent for using part of the home, but that is a different arrangement and has wider tax and legal consequences.

Can I charge my company rent?

Potentially.

A director who personally owns or rents their home may enter into a formal licence agreement allowing the company to use part of the property.

The company may then pay a reasonable amount of rent for that business use.

However, this should not be confused with the £6 weekly homeworking allowance.

A rental arrangement may create:

• Taxable property income for the director
• A Corporation Tax deduction for the company
• Personal record-keeping obligations
• Capital Gains Tax considerations
• Private Residence Relief issues
• Business-rates considerations
• Mortgage or tenancy restrictions
• Home-insurance implications
• Planning or licensing issues

The rent should be commercially reasonable and supported by a written agreement.

The director may be able to deduct certain costs associated with providing the space when calculating their taxable rental profit, but this will depend on the facts.

The room should not normally be used exclusively for business at all times without considering the Capital Gains Tax consequences.

Using the room for some private purpose outside working hours may help demonstrate that it has not been set aside exclusively for business.

A rental arrangement should be reviewed before payments begin rather than created retrospectively at the year end.

Can the company pay my Council Tax?

Council Tax is normally a personal household expense.

It would generally be payable whether or not the director worked from home.

The company should not ordinarily pay or reimburse the director’s Council Tax as a tax-free homeworking expense.

Council Tax may become relevant when calculating the costs associated with a formal rental arrangement, but this does not mean the company can simply pay a percentage of the bill directly without wider consequences.

Could working from home create business rates?

Usually, using a small part of a home as an office will not result in separate business rates.

However, business rates may become relevant where:

• Part of the property has been converted specifically for business
• Employees regularly work at the property
• Customers visit the property
• Goods or services are sold from the premises
• The property is divided into separate domestic and commercial areas
• A room or outbuilding is used exclusively for business

The Valuation Office Agency may assess part of the property separately in more substantial business-use cases.

Directors should also check whether they need permission from:

• Their mortgage provider
• Their landlord
• Their home insurer
• Their local planning authority
• Their local council

Could working from home affect Capital Gains Tax?

Potentially.

Private Residence Relief can normally protect some or all of the gain arising when a person sells their main home.

However, relief may be restricted where a clearly identifiable part of the property has been used exclusively for business purposes.

Occasional or temporary use of a room as an office does not normally amount to exclusive business use.

Problems are more likely where:

• A room has been permanently converted into an office
• The space is never used privately
• The company formally occupies a specific area
• Clients or staff regularly attend
• Commercial alterations have been made
• Business rates apply to the area

This does not mean directors should avoid working from home.

It means the way the space is used and documented should be considered before entering into a formal rental or exclusive-occupation arrangement.

Can my company pay for cleaning?

General household cleaning is a personal expense.

The company should not normally pay the cost of cleaning the whole home simply because the director works there.

A cost that relates specifically to a dedicated company workspace or company-owned equipment may be treated differently.

For example, a separately identified cost for cleaning a business meeting room may have a stronger commercial justification than a weekly domestic cleaning bill.

The company should retain evidence explaining:

• Which area was cleaned
• Why the cleaning was required
• Whether the cost was additional
• Whether there was any private benefit
• How the amount was calculated

Can my company pay for a mobile phone?

A company can generally provide one qualifying mobile phone or SIM card to a director or employee without creating a taxable Benefit in Kind, provided the contract is between the company and the supplier.

The exemption can normally cover:

• The handset
• Line rental
• Business calls
• Private calls
• Data usage

The key point is that the contract should normally be in the company’s name.

If the contract remains in the director’s personal name and the company pays or reimburses it, different Income Tax and National Insurance rules may apply.

Read Merranti’s guide to company-paid mobile phones before transferring an existing personal contract to the business.

Can the company reclaim VAT?

Potentially.

Where the company is VAT registered, it may be able to reclaim VAT on home-office costs that relate to its taxable business activities.

This may include VAT on:

• Computer equipment
• Office furniture
• Software
• Stationery
• Business telephone costs
• Certain repairs to business equipment
• Other qualifying business purchases

A valid VAT invoice should normally be addressed to the company.

Where an item has both business and private use, the company may need to:

• Restrict the VAT claim
• Apportion the cost
• Account for private use
• Apply the relevant VAT rules for employee benefits

The company should not assume that VAT can be reclaimed on general domestic expenditure merely because the director works from home.

Merranti’s VAT services can help companies review the treatment of mixed business and personal costs.

Does the company receive Corporation Tax relief?

Where a cost is incurred wholly and exclusively for the purposes of the company’s trade, it may normally be deductible when calculating taxable profits.

This can include qualifying:

• Homeworking payments
• Office equipment
• Business software
• Telephone expenses
• Business insurance
• Employee expenses
• Rent paid under a commercial home-office agreement

However, the Corporation Tax treatment does not automatically determine the director’s personal tax treatment.

A payment might be deductible for the company but still create:

• Taxable income for the director
• A Benefit in Kind
• PAYE obligations
• National Insurance
• Property income
• Capital Gains Tax consequences

Both sides of the arrangement should therefore be reviewed.

Good bookkeeping matters

Homeworking costs should be recorded clearly and consistently.

The company should retain:

• Purchase invoices
• Receipts
• Broadband contracts
• Mobile phone contracts
• Utility calculations
• Homeworking agreements
• Rental or licence agreements
• Board minutes
• Payment records
• Asset registers
• VAT invoices
• Payroll records
• Evidence of business use
• Details of any director contribution or reimbursement

Company purchases should not be mixed indiscriminately with personal household purchases.

For example, an invoice containing a monitor, family groceries and domestic furniture creates unnecessary bookkeeping and evidence problems.

Merranti’s bookkeeping service can help businesses keep homeworking, personal and company transactions clearly separated.

You can also read Merranti’s guide to the records businesses should keep for HMRC.

Common homeworking mistakes

Paying the mortgage through the company

A personal residential mortgage does not become a company expense because the director works from home.

Claiming all household utilities

Only reasonable additional costs should normally be reimbursed under the homeworking exemption.

Claiming relief personally after 6 April 2026

Directors and employees can no longer claim a deduction from HMRC for unreimbursed homeworking household costs during 2026/27.

Failing to document the homeworking arrangement

Even in a one-director company, the arrangement between the company and director should be recorded.

Reimbursing personal broadband automatically

An existing personal broadband bill will not necessarily become tax-free because it is reimbursed by the company.

Mixing personal and company purchases

Company purchases should be identifiable and supported by invoices addressed appropriately.

Buying equipment mainly for family use

A television, gaming computer or premium household item does not become business equipment merely because it is occasionally used for work.

Forgetting that company assets belong to the company

A company-funded desk, chair, laptop or monitor does not automatically become the director’s personal property.

Charging rent without an agreement

A rent or licence arrangement should be written, commercially supportable and reviewed for wider tax consequences.

Using a room exclusively for business without considering Capital Gains Tax

Exclusive business use can affect Private Residence Relief when the property is sold.

A practical homeworking checklist

Before the company pays a homeworking cost, establish:

• What is being purchased or reimbursed?
• Why does the business require it?
• Who entered into the contract?
• Whose name appears on the invoice?
• Did the cost exist before homeworking began?
• Is the cost additional?
• Is there any personal or family use?
• Will the company own the item?
• Is the amount commercially reasonable?
• Does the expense need to be reported through payroll?
• Is there a potential Benefit in Kind?
• Can VAT be reclaimed?
• Does the company need a homeworking agreement?
• Would a £6 weekly payment be simpler?
• Could a formal rental agreement create wider tax consequences?

Frequently asked questions

Can I work entirely from home through my limited company?

Yes.

Many limited-company directors operate successful businesses entirely from home.

You should consider any mortgage, tenancy, insurance, planning and business-rates requirements that may apply.

Can my company pay me £6 per week?

Potentially, yes.

Where you regularly work from home under an agreed arrangement, the company can normally pay £6 per week or £26 per month towards additional household costs without requiring supporting evidence.

Can I personally claim homeworking tax relief from HMRC?

Not for the 2026/27 tax year.

From 6 April 2026, employees and directors can no longer claim a deduction for unreimbursed additional homeworking household expenses.

The company may still reimburse qualifying costs.

Can my company buy my desk?

Yes, where the desk is purchased to enable you to carry out your duties and the arrangement meets the relevant conditions.

The desk will normally remain a company asset.

Can my company buy an office chair?

Usually, yes.

The purchase should be reasonable and primarily connected with the director’s employment duties.

Can I put my mortgage through the company?

Generally, no.

A mortgage is a personal cost. A separate rental or licence agreement may be possible, but it should be reviewed professionally.

Can the company pay my electricity?

The company can contribute towards reasonable additional electricity costs caused by regular homeworking.

It should not normally pay the entire household bill tax-free.

Can the company pay my heating?

Additional heating costs may be covered through the £6 weekly payment or through reimbursement of evidenced actual additional costs.

Can my company pay my broadband?

Potentially.

A new or dedicated business connection may receive more favourable treatment than an existing personal broadband package.

Can my company pay for office equipment?

Yes, provided the equipment is required for business duties and is recorded correctly.

Can the company pay for decorating my office?

This requires careful consideration.

General improvements to the director’s home remain personal. Costs relating specifically to company-occupied premises or a formal rental arrangement should be reviewed separately.

Can the company pay for an extension or garden office?

Building an extension, converting a room or constructing a garden office involves significantly wider tax, legal, VAT and property issues.

The company should not pay these costs without advice.

Do I need to keep receipts?

Yes.

Every material business expense should be supported by appropriate records.

Final thoughts

Working from home offers flexibility, but it does not turn normal household expenditure into company expenditure.

For many directors, the cleanest arrangement is to:

• Document regular homeworking
• Pay the £6 weekly or £26 monthly allowance where appropriate
• Have the company purchase necessary equipment directly
• Keep company and personal contracts separate
• Retain invoices and supporting records
• Review broadband and mobile contracts individually
• Obtain advice before charging rent
• Avoid exclusive business use without considering property-tax consequences

Rather than trying to put the largest possible proportion of household spending through the business, the better approach is to identify genuine company costs and use the available exemptions correctly.

This protects both the company and the director while ensuring appropriate Corporation Tax and VAT relief is claimed.

Merranti Accounting can help company directors:

• Set up an appropriate homeworking arrangement
• Review the £6 weekly homeworking payment
• Calculate evidenced additional household costs
• Assess home-office equipment purchases
• Review broadband and mobile phone arrangements
• Consider a formal home-office rental agreement
• Identify potential Benefits in Kind
• Review Corporation Tax and VAT treatment
• Maintain appropriate bookkeeping records

Written by Jack Smith

Jack Smith is an AAT-qualified accountant with more than 12 years of experience supporting small and medium-sized enterprises and owner-managed businesses.

Jack works with businesses across a wide range of sectors, including professional services, engineering, retail and construction.

He began his career through a five-year apprenticeship in the hotel industry, where he developed practical experience of day-to-day financial operations and hospitality finance. He later spent two years at a specialist accountancy practice working with construction and retail businesses, gaining hands-on experience in bookkeeping, VAT and management reporting.

Jack subsequently spent five years with a large local accountancy firm, continuing to advise SMEs and their owners on their financial and strategic objectives.

His areas of experience include:

• Year-end accounts
• Bookkeeping
• VAT
• Management reporting
• Cash-flow forecasting
• Tax planning
• Business advisory
• Support for owner-managed companies

At Merranti Accounting, Jack takes a practical and approachable approach to accounting. He focuses on helping business owners understand their figures, distinguish personal expenditure from genuine company costs and make informed decisions before transactions are entered into the accounts.

His experience in both industry and accountancy practice gives him a clear understanding of the pressures faced by directors running businesses from home. This includes balancing commercial requirements with household arrangements, maintaining suitable records and ensuring that business expenses are treated correctly.

This article provides general information and should not be treated as personalised tax, legal, VAT or property advice. The correct treatment will depend on the company’s arrangements, how the home is used and the director’s individual circumstances.