Coworking & hot-desk membership

Conditions

1. GOV.UK's self-employed expenses guidance lists rent for business premises among the premises costs you can claim. It does not mention coworking or hot-desk memberships by name, so this page applies the general test for business expenses to them rather than any coworking-specific rule.
2. For both sole traders and companies the test is statutory: section 34 ITTOIA 2005 for unincorporated businesses and section 54 CTA 2009 for companies prevent a deduction unless the expenditure is incurred wholly and exclusively for the purposes of the trade (BIM37007). HMRC reads that as requiring the sole purpose of the expense to be the trade.
3. A membership used partly for personal work is split, not lost. Both sections allow a deduction for any identifiable part or identifiable proportion of an expense that is incurred wholly and exclusively for the purposes of the trade. HMRC distinguishes that case from an expense incurred for a dual purpose, which should be disallowed (BIM37007).
4. An employee paying for their own membership is on section 336 ITEPA 2003, which HMRC calls very restrictive: all of its tests must be passed before a deduction is obtained (EIM31630). The test is objective. It looks at the requirements of the job itself rather than the circumstances or preferences of any particular individual doing it, and the expense must be one that each and every holder of that employment would have to incur (EIM31640).
5. For a mixed-use expense, HMRC's employment manual says a single expense can be apportioned if a definite part or proportion of it can properly be attributed wholly and exclusively to the performance of the duties, and that expenditure cannot be apportioned where it serves two or more purposes concurrently and one of those purposes is not to do with the performance of the duties (EIM31661).
6. Where the employer provides the membership directly, rather than the employee contracting for it, section 316 ITEPA 2003 removes the income tax charge on accommodation, supplies or services the employee uses in performing the duties of the employment, provided any private use is not significant. Where the provision is not on premises the employer occupies, the employer's sole purpose must also be to enable the employee to perform those duties, and what is provided must not be an excluded benefit such as a motor vehicle (EIM21611, EIM21614, EIM21612).
7. Where the employee incurs the cost on behalf of the employer and the employer pays or reimburses it, section 316ZA ITEPA 2003 gives a parallel exemption for payments or reimbursements made on or after 6 April 2026. Condition A is the employer's intention, when the accommodation, supplies or services are first provided, that they will be used by the employee in performing the duties of the employment and that any private use will not be significant. Condition B applies where the provision is other than on premises occupied by the employer, and requires that the sole purpose of the provision is to enable the employee to perform the duties of the employment and that what is provided is not an excluded benefit (EIM21619).
8. Where the membership is the employee's own contract, section 316 does not apply. HMRC states that where an employee contracts for supplies or services and the employer either reimburses the cost to the employee or pays the service provider directly on the employee's behalf, the section 316 exemption does not apply, and HMRC treats both the reimbursement and the direct payment to the provider as taxable. From 6 April 2026 HMRC says an exemption under section 316ZA applies in these situations if its conditions are met (EIM21613). Section 316ZA is not the only provision that can affect the outcome, and other statutory exemptions or deductions may apply, so check an arrangement like this with an accountant.
9. HMRC's guidance on sections 316 and 316ZA does not mention coworking or hot-desk memberships. Whether a particular membership falls within either exemption turns on the facts, so a director or employee in this position should check it with an accountant.
10. The simplified flat rate for working from home counts only hours worked in your home. Section 94H ITTOIA 2005 bases it on hours spent wholly and exclusively on work done in the person's home for the purposes of the trade (BIM75010), so hours at a coworking space do not count towards it. GOV.UK states simplified expenses cannot be used by limited companies.

Common mistakes

• Claiming a membership that is also used for personal or side-project work in full, rather than only the identifiable part or proportion used wholly and exclusively for the business.
• An employee treating a personally paid membership as deductible because they prefer to work there. HMRC's section 336 ITEPA 2003 test looks at the requirements of the job itself rather than the circumstances or preferences of any particular individual doing it (EIM31640).
• Counting hours worked at a coworking space towards the simplified flat rate for working from home, which is based only on hours worked in the home (BIM75010).
• Treating a membership in the employee's own name as covered by section 316 because the employer pays the provider or reimburses the employee. HMRC states that exemption does not apply where the employee contracts and the employer reimburses or pays the provider directly (EIM21613). From 6 April 2026 HMRC says section 316ZA can exempt it if its conditions are met (EIM21613).

What to keep

• Membership invoices or subscription receipts from the coworking provider, showing the amount and period.
• A note of any personal use if the membership is not used only for the business, so the business part or proportion is supportable.
• If you also use the simplified flat rate for working from home, a record of the hours you work at home — GOV.UK asks you to keep records of hours you work at home.
• For a membership an employer provides, pays for or reimburses, the employer's stated policy on private use. HMRC accepts the not significant test is met where the employer's policy about private use is clearly stated to the employees, and any decision not to recover the costs of private use is a commercial decision (EIM21613).

Real-world example

A self-employed software developer takes a dedicated hot-desk membership at a local coworking space for £350 per month and uses it only for client work. Over a year that is £4,200, incurred wholly and exclusively for the purposes of her trade — the test section 34 ITTOIA 2005 sets (BIM37007) — so it is deductible in full. If she also works from home on other days and uses the simplified flat rate for working from home, only the hours she works in her home count towards it (BIM75010); her hours at the coworking space do not.

Frequently asked