Can You Charge Your Company Rent?
- Jul 7
- 4 min read
A Guide for Limited Company Directors Working From Home
If you run your limited company from home, you may be able to claim some of the costs of using your home for business.
However, this does not mean you can simply put part of your mortgage, rent or household bills through the company.
There are three main options available to directors:
HMRC’s approved homeworking allowance
Reimbursement of actual additional household costs
Charging your company rent under a non-exclusive licence agreement
The right option depends on your circumstances, your level of homeworking and your personal tax position.
Watch our video below for a simple explanation of each option.
Option 1: HMRC’s £6 per week homeworking allowance
The simplest option is for your company to pay you HMRC’s approved homeworking allowance.
For 2026/27, this is:
£6 per week, or
£26 per month for monthly paid employees.
Your company can pay this amount where you regularly work from home under an agreed homeworking arrangement. You do not need to keep receipts to prove the additional cost where the payment is limited to £6 per week.
For most directors, this is the easiest option.
The payment is normally tax-free for you, with no National Insurance or benefit in kind charge. It is also an allowable cost for the company.
This is often suitable where you work from home regularly, but do not have significant additional household costs.
Option 2: Claiming actual additional household costs
Your company may pay more than £6 per week where you have higher additional costs caused by working from home.
The key word is additional.
The company can only reimburse costs that arise because you are working from home. It cannot reimburse household costs you would have paid anyway.
Possible costs may include:
additional heating and electricity;
metered water, where business use increases the cost;
business telephone calls;
broadband, but only where there was no existing connection and it is needed mainly for business use.
HMRC’s guidance confirms that larger payments can be made, but your company must keep evidence showing how the figure has been calculated.
Costs you cannot claim through this method
You cannot normally claim:
mortgage interest;
mortgage capital repayments;
rent;
council tax;
fixed water rates;
general home insurance.
Mortgage interest is a personal cost of borrowing money. It is not a cost of providing business accommodation to your company.
You should keep copies of bills, evidence of your homeworking pattern and a clear calculation showing how you arrived at the amount claimed.
There is no single HMRC formula. The calculation must be reasonable and based on the facts.
Option 3: Charging your company rent
A director can allow their company to use part of their home and charge the company rent.
This is usually done through a written non-exclusive licence to occupy.
A non-exclusive licence means that your company does not have sole use of the room or workspace. You must still be able to use the area privately.
This matters because a room used exclusively for business may affect the Capital Gains Tax relief available when you sell your home. HMRC confirms that a room with both business and residential use can still qualify for full Private Residence Relief, but exclusive business use may restrict the relief.
What should the agreement include?
A proper licence agreement should confirm:
the area your company can use;
the business purpose of that use;
that the use is non-exclusive;
the amount of rent payable;
how the rent has been calculated;
when the arrangement will be reviewed.
The rent must be reasonable and commercially justifiable. It should reflect the space used, the facilities provided and the amount of time the company uses the area.
Your company may then claim Corporation Tax relief on the rent, provided it is a genuine and reasonable business cost.
The personal tax position
Charging rent is not the same as receiving a tax-free homeworking allowance.
The rent received is personal income. It will form part of your property income and will need to be reported through your Self Assessment tax return.
You can claim relevant costs against the rental income, but only where they relate to the letting arrangement. HMRC requires accurate records of the rent received and the expenses claimed.
The rental profit may also affect your wider tax position.
For example, it could increase your adjusted net income and affect:
the High Income Child Benefit Charge;
the withdrawal of your Personal Allowance;
the level of tax you pay on dividends or other income.
This is why charging rent should always be reviewed alongside your full personal and company tax position.
Which option is right for you?
For many directors, the £6 per week allowance is the most practical option. It is simple, tax-free and involves very little administration.
Claiming actual additional costs may be better where you can clearly show higher household costs caused by homeworking.
Charging company rent can be useful in some circumstances, but it needs proper documentation and tax planning. It is not automatically more tax efficient just because the company receives Corporation Tax relief.
The important question is not simply:
“Can I claim it?”
It is:
“What is the most tax-efficient and compliant option for my situation?”
Disclaimer: The content on this page is for general information only and should not be treated as tax, legal or financial advice. Tax planning should always be reviewed against your individual circumstances before action is taken.
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