Home broadband

Conditions

1. Sole traders: HMRC says expenditure on an internet connection (including broadband and wireless broadband) is allowable to the extent that the connection is used for trade purposes. Where use is mixed, it follows the approach used for telephone rentals: a proportion based on the ratio of trade use to total use (BIM47820).
2. Where private use is not significant, the full cost of the broadband service can be claimed as a business expense (BIM47820).
3. HMRC's general guidance on apportionment tells its officers not to argue that such costs would be incurred in any event and only the marginal additional costs attributed to trade use are allowed (BIM37600). The statutory basis is section 34(2) ITTOIA 2005, which allows a deduction for an identifiable part or identifiable proportion of an expense incurred wholly and exclusively for the trade.
4. For a sole trader, broadband is not a use-of-home cost: telephone and broadband costs do not relate to the home itself and are not household expenses (BIM47820). GOV.UK says the simplified-expenses flat rate for working from home does not include telephone or internet expenses, and you can claim the business proportion of these bills by working out the actual costs. HMRC confirms that using the flat rate does not prohibit a separate deduction for telephone and broadband/internet connection costs (BIM75010).
5. Companies: a limited company deducts the costs of running its business before Corporation Tax, subject to the wholly and exclusively test in section 54 CTA 2009. Whether the director or employee is taxed on broadband the company pays for depends on how it is provided.
6. If the company provides internet access at the employee's home solely for work purposes, it is exempt under section 316 ITEPA 2003 as long as any private use is not significant (EIM21617). For services provided for both business and private use, GOV.UK says the employer must report them on form P11D and pay Class 1A National Insurance on the value of the benefit.
7. If the employee is already paying for a broadband connection when they begin to work from home, there is no additional expense, so the employer cannot reimburse it tax free under section 316A ITEPA 2003 and any such payment should be subject to PAYE and National Insurance (EIM01475). If the employee does not already pay for broadband and needs it in order to work from home under homeworking arrangements, the fee is an additional household expense the employer can reimburse tax free under section 316A (EIM01475). GOV.UK adds that the connection must be mainly used for business purposes.
8. From 6 April 2026, where the employee pays for internet access on behalf of the employer and the employer pays or reimburses that cost, the separate exemption in section 316ZA ITEPA 2003 may apply if its conditions are met (EIM21617), including that the employer intends any private use to be not significant (EIM21619).
9. Employees: from 6 April 2026, no deduction from earnings is allowed for additional household expenses which the employee incurs in the performance of the duties at home (section 360B ITEPA 2003), and HMRC applies this to an employee who pays for their own internet subscription without reimbursement (EIM21617). GOV.UK states that from the tax year 6 April 2026 to 5 April 2027, you will not be able to claim tax relief for working from home.
10. For the 4 previous tax years, which GOV.UK says you can still claim for, GOV.UK says you cannot claim for things that you use for both private and business use, such as rent or broadband access. HMRC's manual, for 6 April 2006 to 5 April 2026, says an employee may be entitled to a deduction if they can show the internet costs related to use wholly, exclusively and necessarily in the performance of the duties, but that where a broadband package provides unlimited access with no separate billing of business use, no part of the cost can be identified as business use, so no deduction is due (EIM21617).

Common mistakes

• A sole trader claiming 100% of a broadband bill that the rest of the household also uses significantly. The full cost is claimable only where private use is not significant (BIM47820).
• A sole trader cutting the claim down to the extra cost the business adds. HMRC does not restrict the claim to marginal additional costs (BIM37600).
• Assuming the simplified-expenses flat rate for working from home covers broadband. It does not include telephone or internet expenses.
• An employee assuming they can claim part of their broadband for working from home. They cannot, and from 6 April 2026 relief for unreimbursed household expenses has been removed.
• A company reimbursing broadband the employee was already paying for as if it were a tax-free homeworking expense. There is no additional expense, so section 316A does not apply (EIM01475).

What to keep

• Broadband bills and a note of how the business share was worked out, comparing trade use with total use.
• Where the company pays, the contract showing whose name it is in, and any written homeworking arrangement.
• Where an employer reimburses a new connection under section 316A, a record that the employee did not already have broadband before starting to work from home.

Real-world example

A sole trader working from home uses the family broadband for client work, and the rest of the household uses it for streaming. Private use is significant, so they claim a share of the bill based on trade use compared with total use, rather than the whole bill or only the extra cost the business adds. They use the simplified-expenses flat rate for working from home, which does not include internet costs, so the broadband share is claimed separately on actual costs. An employee living in the same house cannot claim anything for the broadband.

Frequently asked