Insurance and tax considerations around homeworking

Last updated: 15 Dec 2023

Working from home can have an impact on your tax situation and insurance policies, so it’s worth checking if you need to amend any of these. It may also have an impact on your mortgage or rental agreements.


Anyone working from home should check their insurance policy. Traditional household contents insurance often excludes equipment used for commercial purposes, for example.

You must therefore ensure that your employer’s own insurance covers the equipment they have provided.

It is also wise to ensure that building insurance will continue to be valid. Insurers may believe there is a greater fire risk because more electrical equipment is installed and/or that these items make the home a more attractive target for burglars.

Council tax

The part of your property used for work may be liable to business rates, depending on:

  • the extent of homeworking
  • if any modifications have been made to facilitate homeworking.

The remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).

If any increased charges are made as a result of the Valuation Office Agency believing that business rates do apply, they should be met by the employer.

Mortgages, rental agreements and leasehold details

You should check your mortgage, rental agreement or leasehold details to ensure that homeworking does not in any way affect your security of tenure or any other related matter. Some mortgages, rental agreements and leases have covenants that may be affected by homeworking. In most cases there may just be a notification requirement.

Homeworking allowance and tax relief

If you are working from home while remaining in paid full-time employment, your employer may pay you a tax-free allowance towards your additional household expenses.

Currently, HMRC allows employers to make a payment of £6 a week towards such costs without keeping records. Employers may pay more than this where you can provide proof of payment.

If your employer does not pay this amount, you cannot claim it directly from HMRC, however you may be able to claim tax relief.

More information on making claims for expenses for homeworking is available from HMRC.

You may, however, be able to claim these expenses directly from HMRC if you are not in regular paid employment (for example, if you are self-employed).

For more information on this, members can download our full guide to homeworking.

Get help

If you have any concerns about insurance or tax while homeworking, or if you have further questions about this issue, contact us for more help.