IMPORTANT: This article applies to sole traders and self-employed individuals.
If you are an employee taxed under PAYE, THIS POST IS NOT FOR YOU.
👉 READ THIS INSTEAD: Working From Home Tax Relief for Employees
Introduction
If you are self-employed in Ireland and work from home, you are entitled to claim a portion of your household costs as business expenses.
However, the rules for sole traders are not the same as those for employees, and confusing the two is one of the most common causes of Revenue queries.
This article explains:
- What you can claim
- How claims must be calculated
- What Revenue expects to see if they review your return
All guidance below reflects Revenue’s “wholly and exclusively” rule and relevant Tax and Duty Manuals. You can also download this spreadsheet to help you track your monthly expenses.
1. Who This Article Applies To
This guide applies if you:
- Are a sole trader
- File a Form 11
- Are taxed under Schedule D Case I
- Run your business from home full-time or part-time
If you are paid through payroll as an employee, stop here and read the employee article instead.
2. The Core Rule: “Wholly and Exclusively”
Revenue allows a deduction for expenses that are:
“Wholly and exclusively incurred for the purposes of the trade”
When an expense is partly personal and partly business, you must:
- Apportion it
- Claim only the business portion
- Be able to justify the method used
There is no fixed percentage allowed by Revenue for sole traders.
3. Expenses You Can Typically Apportion
Common home-working expenses include:
- Electricity
- Heating
- Broadband
- Refuse charges
- Home insurance (portion)
- Mortgage interest only (not capital)
- Rent (where applicable)
You are claiming these as business deductions, not tax credits.
4. How Apportionment Works in Practice
Revenue expects a reasonable basis, commonly using:
a) Space
Number of rooms used for business ÷ total rooms
b) Time
Hours or days the space is used for business
Often, both are combined.
Example:
- 1 room used as an office
- 5 rooms in the house
- Office used 50 percent of the time
Business proportion = 10 percent
That percentage is applied to shared costs.
5. What Revenue Does Not Allow
You cannot claim:
- Mortgage capital repayments
- The full cost of household bills
- Personal phone usage
- Non-business renovations
- Over-inflated percentages
Claims must be conservative and defensible.
6. The Difference From Employee WFH Relief
Unlike employees:
- There is no 30 percent rule
- There is no per-day calculation
- Claims reduce taxable profits directly
- Over-claims increase audit risk
This is why employee guidance should never be used for sole traders.
7. Capital Gains Tax Warning
Using part of your home for business may affect CGT relief on sale.
In practice:
- Small, reasonable claims rarely cause issues
- Aggressive claims using large percentages can
This is another reason to stay proportionate.
8. Record-Keeping Expectations
Revenue expects:
- Utility bills
- Mortgage interest statements
- Insurance documents
- A clear apportionment method
- Consistency year to year
Keep records for six years.
9. Practical Best Practice
Most accountants recommend:
- Recording 100 percent of household costs
- Applying the business percentage at year-end
- Keeping the percentage stable unless circumstances change
This keeps bookkeeping simple and defensible.
10. Final Word for Sole Traders
Working from home deductions are legitimate and valuable, but they are:
- Judgement-based
- Fact-specific
- Open to Revenue review
If you are unsure whether you are an employee or a sole trader for tax purposes, get that clarified first. The tax treatment is fundamentally different, and understanding small business tax Ireland basics will help you get it right from the start.
A Note of Caution on Mortgage or Rent Apportionment and Property Sales
Sole traders should be aware that claiming a portion of mortgage interest or rent for a home office can have capital gains tax implications when the property is sold.
In Ireland, a private residence is normally exempt from Capital Gains Tax under Principal Private Residence (PPR) relief . However, where part of a home is treated as being used for business purposes , Revenue can restrict PPR relief on that portion of the property. Consulting an accountant for property management can help you understand exactly how PPR relief may be affected and ensure the correct portion is reported.
In theory, this means that if:
- a specific room is regularly used as an office, and
- a proportion of mortgage interest or rent has been claimed as a business expense,
Revenue could argue that the same proportion of the property was not used exclusively as a private residence, potentially exposing that portion of any gain on sale to CGT.
In practice, Revenue has generally taken a pragmatic approach, and small, reasonable home office claims that do not involve structural changes or exclusive business use are unlikely to trigger a significant CGT exposure. However, more aggressive apportionments, such as claiming a large percentage of the home or designating a permanently exclusive office space, increase the risk.
For this reason, many accountants advise:
- keeping home office apportionments conservative,
- avoiding claims that suggest permanent or exclusive business use of part of the dwelling, and
- being consistent year to year rather than increasing percentages over time.
This is not to say that mortgage interest or rent apportionment is disallowed, but rather that it should be approached with care, with an awareness of the potential downstream impact when the property is eventually sold.
👉 If you are an employee, this article does not apply.
READ THIS INSTEAD: Working From Home Tax Relief for Employees