Can I reclaim VAT on home office costs

Q: What mistakes come up most often?

Claiming the whole bill. Energy and broadband at home almost always involve private use and need apportioning. Claiming on contracts in a personal name. A company cannot reclaim VAT on a supply made to its director. Claiming on the Flat Rate Scheme. Businesses using the Flat Rate Scheme cannot reclaim VAT on purchases except certain capital assets over £2,000, so most home office costs give no VAT recovery. Using the income tax figure without checking it. A direct tax percentage can be used, but it must still give a fair VAT result. Claiming on the home itself. Repairs and improvements to domestic parts of the house are blocked for owners and directors. If HMRC opens a check into your return, tax investigation insurance pays your accountant's fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Yes, but only the business share. A VAT registered business run from home can reclaim VAT on costs genuinely incurred for the business, apportioning anything that is also used privately, such as energy and broadband. Equipment and fittings used only in a dedicated office can be claimed in full, while the costs of the home itself generally cannot.

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What is the basic rule for VAT on costs at home?

VAT is only input tax if it is incurred for a business purpose. HMRC’s VAT Input Tax Manual at VIT41600 starts from the position that providing domestic accommodation is a personal responsibility, so most VAT on a home is not input tax. It then makes clear that running a business from home does not stop VAT genuinely incurred for the business being reclaimed. The difficulty is working out what was really for the business and, where something is used both ways, how much.

VIT41600 sorts home costs into three groups:

costs that relate specifically to a room or area used for the business, such as an office or workshop, which can be treated wholly as input tax (mainly fixtures, fittings and decorating)
items used purely for domestic purposes, such as a bedroom suite, where no VAT can be claimed
costs with mixed business and private use, such as fuel and power, general maintenance of the property and security systems, which must be apportioned

This is separate from income tax. The flat rate deduction and the use of home calculations in our guides to working from home expenses and simplified expenses do not create any VAT entitlement. VAT recovery always needs actual VAT on an actual supply to the business.

Can I reclaim VAT on gas and electricity used at home?

Yes, for the business proportion. Household fuel and power is normally charged at the reduced rate of 5%. VAT Notice 701/19 says supplies for genuine domestic use qualify, and where premises are used partly for qualifying and partly for other purposes, the whole supply stays at the reduced rate if 60% or more is for qualifying use. A home with one room used as an office is normally well over that line, so the bill usually shows VAT at 5% throughout.

The business then reclaims its share of that 5% VAT. A fair basis might be the number of rooms, floor area, or the hours the office is used, as long as the result is reasonable. The amounts are often small, so it is worth checking the calculation is proportionate to the VAT involved. Our page on VAT on domestic fuel and power covers the reduced rate itself.

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What about broadband and phone bills?

VAT Notice 700, paragraph 12.3.3, says that where a business contracts and pays for a broadband connection to a home so that someone can work remotely, input tax can be recovered on the cost of the connection, including routers, installation and call bundles. Where private use is expected or there are extra private charges, such as entertainment packages or out of bundle charges, the claim should be restricted to business use. Where a fixed line is provided with no expectation of home working, no VAT should be recovered.

For mixed use bills HMRC accepts any method that gives a fair and reasonable result. Notice 700 gives the example of analysing a sample of bills over a representative period and applying the resulting ratio going forward.

Can I reclaim VAT on computers, desks and other equipment?

Equipment used only for the business, such as a desk and filing cabinets kept in the office, is reclaimable in full in the normal way. Where goods will be used privately as well, Notice 700, paragraph 32.2.2, gives a choice:

apportion the VAT when you buy the item and reclaim only the business share, or
reclaim all the VAT and then account for output tax each period on the cost of making the goods available for private use

Where business use is minimal, VIT25220 also allows the business to leave the asset outside the business altogether. No VAT is then reclaimed, and none is charged if the item is later sold, but that decision cannot be revisited later even if business use increases. The choices are compared in more detail in business and private use: apportioning VAT.

Services are different. VIT25300 says VAT on services used for both business and private purposes must be apportioned at the outset, and once apportioned it is not normally adjusted later for changes in use.

What about repairs, decorating and the house itself?

Notice 700, paragraph 12.2.2, says a sole proprietor, partner or director cannot recover VAT on expenses such as repair or maintenance of their domestic accommodation, even if the business owns the property and pays the cost. Where part of the accommodation is used for business, such as a room for meetings or as an office, part of the VAT can be reclaimed. Redecorating the office itself is therefore claimable, while a new kitchen or bathroom used by the household is not, and a general cost such as a roof repair would need apportioning.

Some home costs carry no VAT to reclaim at all. The grant of an interest in or licence to occupy property is normally exempt (Notice 742, paragraph 3.1), and interest on a loan is consideration for an exempt supply of credit (VATFIN5550), so rent on a home and mortgage interest do not produce input tax.

Does it make a difference if I trade through a company?

Yes. The supply must be made to the business that reclaims the VAT. Notice 700, paragraph 12.3.4, says that where a business pays for a mobile, broadband or package contract that an employee entered into with the provider, no input tax is recoverable, because the supply is made to the employee. A director is in the same position. If the energy account or broadband contract is in your own name and your company simply reimburses you, the company has no input tax to claim.

A claim also needs evidence. VIT31000 lists a VAT invoice meeting regulation 14 of the VAT Regulations 1995 as the primary evidence, so the invoice should be addressed to the business where the contract allows. Our guides to VAT on director personal expenses and VAT invoice requirements cover both points.

For equipment supplied to staff for home working, VIT43930 says VAT is not input tax where computers get no business use, and that where some private use is intended an apportionment should be made using a simple method that is easy for HMRC to check.

How do I work out a fair business proportion?

The law does not prescribe a method. VIT25450 says a business can use round percentages based on a sample period or on the apportionment used for direct tax, which can give a fair result where the tax at stake is small and private use does not change much. Where private use varies a lot, the method must adjust to reflect it. Businesses do not need HMRC’s agreement to a method, and HMRC challenges the result rather than the method itself, substituting its own figure if a method gives an unfair answer.

Illustration only. A sole trader registered for VAT works from a dedicated office in a six room house and makes only taxable supplies. In one quarter:

Cost	VAT on invoice	Basis	VAT reclaimed
Electricity and gas	£30 at 5%	1 room of 6	£5
Broadband in the business name	£18	50% business from a sample of usage	£9
Desk for the office	£50	Wholly business	£50
Laptop	£200	80% business, apportioned on purchase	£160
New bathroom	£1,000	Domestic	Nil

The total claim is £224. Keeping a short note of how each percentage was set, and reviewing it each year, is usually enough to support it.

What mistakes come up most often?

Claiming the whole bill. Energy and broadband at home almost always involve private use and need apportioning.
Claiming on contracts in a personal name. A company cannot reclaim VAT on a supply made to its director.
Claiming on the Flat Rate Scheme. Businesses using the Flat Rate Scheme cannot reclaim VAT on purchases except certain capital assets over £2,000, so most home office costs give no VAT recovery.
Using the income tax figure without checking it. A direct tax percentage can be used, but it must still give a fair VAT result.
Claiming on the home itself. Repairs and improvements to domestic parts of the house are blocked for owners and directors.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.