Home Workshop & Garage · Business Expenses
Home Workshop and Garage: Can You Claim It as a Business Expense?
If you store tools, maintain equipment, or fabricate materials in a home garage, you're likely entitled to tax relief. But how you claim it — and how exclusively you use it for business — determines both the value of the claim and whether it creates a Capital Gains Tax problem when you sell your home.
Most CIS subcontractors know they can claim for tools and materials. Far fewer claim for the space those tools are stored and maintained in — a legitimate deductible expense that's consistently overlooked. The missed claim is real money. But so is the risk of claiming incorrectly: declare your garage as exclusively for business use and you may create a Capital Gains Tax liability on part of your home when you eventually sell it.
What You Can Actually Claim
The "wholly and exclusively" principle underpins all self-employed expense claims — the cost must be incurred wholly and exclusively for trade purposes. For home workspace claims, HMRC accepts that this doesn't mean the space has to be used for business 100% of the time. It means the portion of costs you claim should accurately reflect the proportion of business use.
For a garage used to store and maintain tools, the claimable proportion of household running costs is typically calculated based on floor space and time. If your garage represents 10% of your home's total floor area and you use it for business purposes roughly half the time, a proportional claim of around 5% of household running costs is defensible.
The claim isn't complicated. What complicates it is declaring the space as exclusively for business — which protects the claim on paper but can cost you significantly more in Capital Gains Tax when you sell your home.
CIS Tax Insights · 2026Two Methods — and Which One to Choose
HMRC provides two ways to calculate a home workspace claim. The right choice depends on how much time you spend in the space and what your actual household costs are.
- Fixed monthly rate based on hours worked at home — no calculation required
- Only available if you spend 25 hours or more per month in the space
- Simpler record-keeping — no need to track utility bills
- Usually results in a lower claim than actual costs
- Does not create any Capital Gains Tax risk
- Calculate floor space as a percentage of total home area
- Apply that percentage to actual household bills
- Higher claim — especially if you have significant running costs
- Requires keeping 12 months of utility bills and a usage log
- Exclusive use declaration can trigger CGT — avoid this
HMRC Simplified Expenses Rates (2026/27)
If you use the flat rate method, these are the current HMRC approved monthly amounts. The threshold is firm — below 25 hours per month, this method is not available to you.
| Hours worked at home per month | Monthly flat rate |
|---|---|
| Fewer than 25 hours | Not eligible — use actual costs method |
| 25 to 50 hours | £10 per month |
| 51 to 100 hours | £18 per month |
| 101 hours or more | £26 per month |
For most CIS subcontractors using a garage primarily for tool storage — not as a dedicated workshop where they spend significant hours — the actual costs method generally produces a higher claim. A garage representing 10% of a home with £6,000 annual running costs gives a £600 deduction, far exceeding the maximum £312 per year from the flat rate. The trade-off is the record-keeping requirement — but twelve months of utility bills saved in a folder is manageable.
The Capital Gains Tax Trap — The Risk Nobody Warns You About
When you sell your home, any profit is normally exempt from Capital Gains Tax under Private Residence Relief. This exemption covers your entire home — provided no part of it has been used exclusively for business purposes.
If you declare your garage or any room as exclusively for business use on your tax return, you may remove the Private Residence Relief on that portion of your property. When you sell, HMRC can calculate what percentage of the total gain is attributable to that "commercial" area and tax it accordingly.
This is the most common mistake in home workspace claims. To claim the full proportional cost, many subcontractors state the space is used exclusively for business. This maximises the tax deduction now but removes CGT exemption on that portion of your home for the entire period of business use. On a modest property gain, the CGT bill can easily exceed the cumulative tax savings from years of workspace claims.
Ensure the space has some domestic use — a bicycle stored in the corner, the lawnmower, seasonal items. Mixed use prevents the "exclusive use" classification and protects your Private Residence Relief. You simply claim the business proportion of the space rather than the full cost, which is what you should be doing anyway.
What a Correct Claim Looks Like in Practice
| Item | Figure |
|---|---|
| Total home floor space | 100 sq metres |
| Garage floor space | 10 sq metres (10%) |
| Annual household running costs (utilities, council tax, insurance) | £6,000 |
| Proportion attributable to garage (10%) | £600 |
| Estimated business use of garage (mixed use — 60% business) | ×0.6 |
| Defensible annual claim | £360 |
| Equivalent flat rate (101h+ per month) | £312 per year |
| Extra claim from actual costs method | +£48 per year |
In this example, the actual costs method produces a modest but real additional claim. The more significant the household running costs and the larger the workspace as a proportion of the home, the more the actual costs method outperforms the flat rate. The flat rate's advantage is simplicity — but if you're already keeping CIS deduction statements and expense records, adding utility bills to the file isn't a significant extra burden.
What to Keep on File
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Measure the Space and Record It Measure the floor space of your garage or workshop and the total floor area of the property (excluding outbuildings). Calculate the percentage. Write it down with the date you measured it — this is the foundation of your proportional claim and should be consistent across returns.
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Keep 12 Months of Household Bills For the actual costs method, you need electricity, gas, council tax, buildings insurance, and any other regular household costs. Keep these in a folder — physical or digital — with the tax year clearly marked. You don't need to submit them with your return, but you need them if HMRC asks.
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Keep a Simple Usage Log A brief log of when you use the space for business — even a rough monthly note in your phone calendar — supports the business proportion you're claiming. It doesn't need to be detailed, but it should exist. A claim of 60% business use with no record of business use is harder to defend than the same claim with a basic log.
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Don't Claim for Permanent Structural Changes If you've built shelving, installed better lighting, or made other permanent improvements to the garage for business use, these are capital items — not revenue expenses. They can't be deducted as running costs in the same way. Speak to your accountant about how capital improvements are treated before including them in your claim.
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Keep Evidence of Mixed Use A photo of the space showing both business use (tools, equipment racks) and domestic items (bicycle, seasonal storage) provides simple evidence that the space isn't exclusively for business. This protects your Private Residence Relief. Take one each year and save it with your tax records.
Frequently Asked Questions
I rent my home rather than owning it. Can I still claim for a home workspace?
Yes — and the CGT issue doesn't apply to renters, since you don't own the property. Renters can claim the actual proportional costs of a workspace including a share of rent, utilities, and council tax. The "wholly and exclusively" principle still applies, and you'll need to keep records of costs and usage. If your landlord has any restrictions on business use of the property, check your tenancy agreement before making any modifications to the space.
Can I claim for a garage that's detached from the main house?
Yes — detached garages used for business purposes can be claimed as a business expense in the same way as an attached garage or workshop. The proportional calculation is similar, though the floor space ratio will be based on the detached structure relative to the whole property rather than the house alone. The Private Residence Relief considerations still apply to a detached outbuilding that forms part of the property, so the mixed-use protection is still relevant.
What if I've been claiming for years but have never kept utility bills?
Most energy suppliers, councils, and insurers can provide historical statements going back at least a few years — it's worth requesting these to reconstruct your records for recent returns. For older years, if HMRC were to query the claim, you'd need to demonstrate the basis for your calculation. Going forward, the simplest approach is to set up a folder (physical or cloud) and drop each monthly statement in as it arrives — a habit that takes seconds but provides solid records if needed.
Does claiming for a home workspace affect my mortgage or insurance?
Claiming a business expense for a portion of your home doesn't automatically affect your mortgage or insurance — but you should check both. Some mortgage lenders require notification if part of the property is used for business purposes. Buildings and contents insurance policies sometimes exclude business equipment or require a separate policy for tools stored at home. It's worth reviewing both when you start making regular business use of a home space, separately from the tax question.
People Also Ask
Can a CIS subcontractor claim a home garage as a business expense?
Yes — if you use a garage or home workshop for storing tools, maintaining equipment, or trade-related tasks, you can claim a proportion of household running costs as a business expense. The claim is based on the floor space of the garage relative to the whole property and the proportion of time it is used for business.
What is the HMRC flat rate for working from home in 2026/27?
HMRC's Simplified Expenses flat rate for use of home requires a minimum of 25 hours per month in the space. The rates are: 25–50 hours = £10/month; 51–100 hours = £18/month; 101 hours or more = £26/month. Below 25 hours per month, this method is not available and you must use the actual costs method instead.
Does claiming a home garage as a business expense affect Capital Gains Tax?
If you declare the garage as exclusively for business use, you may lose Private Residence Relief on that portion of your home — meaning part of any gain when you sell could be subject to Capital Gains Tax. To avoid this, ensure the space has some domestic use (a bicycle, seasonal storage) and claim only the business proportion of costs rather than the full amount.
How do I calculate the business proportion of my garage for tax purposes?
Measure the floor space of your garage and calculate it as a percentage of your total home floor area. Then apply that percentage to your annual household running costs (utilities, council tax, buildings insurance). Finally, multiply by the proportion of time the space is used for business. For example: a 10% garage, 60% business use, £6,000 annual costs = £360 deductible expense.
Claim What You're Entitled To — But Claim It Correctly
The home workshop claim is one of the most consistently overlooked legitimate expenses in construction. The calculation is straightforward, the record-keeping is manageable, and over five years even a modest claim of £360 per year saves a meaningful amount in tax.
The only thing that makes it complicated is the CGT trap — and that's entirely avoidable by ensuring the space has some domestic use alongside the business use. Don't declare it as exclusively for business. Don't claim more than the business proportion. Keep the bills and a basic usage log. That's genuinely all it takes.
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This article is for informational purposes only and does not constitute formal accounting, tax, or legal advice. The tax treatment of home workspace claims — including Capital Gains Tax implications — depends on individual circumstances. Always consult a qualified accountant before making workspace claims or property disposals. Simplified Expenses rates are as published by HMRC for 2026/27 and subject to change.