Working from home costs: how much could you save by flexible working?
By Aimee Tweedale Tuesday 11 May 2021
If you’re usually based in an office, chances are that you’ve spent much of 2020 and 2021 working from home. As the return of commuter life beckons, some of us are considering sticking with the home office. After all, you’ve spent all year getting your tech set-up just right!
According to YouGov, 57% of employees surveyed in 2020 said that they’d like to continue working from home once the coronavirus pandemic is over.
Are you one of those people thinking about switching to the remote lifestyle for good? If so, before you approach your boss you’ll want to weigh up the costs and benefits. You’re likely to save on travel costs, but face higher energy bills, for example.
Each person’s situation is different – but here’s an overview of the pros and cons of working from home – and some tips to save energy while you’re doing it.
Advantages of working from home
Loving your swivel chair and headset? Nailed your video call background?
Perhaps you’ve hit your home-working stride, and you’re thinking about asking your company for permanent flexibility. But what are the benefits of working from home?
Save time and money on your commute
This is the biggest benefit of working from home for most people. Not having to commute to the office is a win-win: you get more time for yourself, and save the money you would’ve spent on travelling.
Find out exactly how much the average Brit saves on commuting further down this page.
You can claim some tax relief
The UK government offers those who work from home some tax relief to cover their expenses. This includes things like work-related phone calls, and higher energy bills.
Keep reading this guide to find out more about how much you could be entitled to, and how to claim.
It gives you more flexibility
Working from home makes it easier to juggle home and work. You can do things like be around for a parcel delivery, or put on a load of laundry – which you’d usually have to wait until evening for.
It’s better for the environment
If you normally drive to work, you could cut your carbon footprint by working from home instead – right?
This one's actually a bit more complicated. On an individual level, working from home will lead to lower carbon emissions if you usually drive more than 6km to work. However, if you normally drive less than that, or use public transport, you might actually create more emissions by staying home (because of your increased energy use).
Overall, though, the International Energy Agency says that a shift towards home working would be a boost for the environment. If everyone worked from home for one day a week, it would reduce overall carbon emissions by 24 million tonnes – roughly the same amount Greater London produces each year1.
Disadvantages of working from home
Of course, in a cost-benefit analysis of working from home, you also need to think about the downsides. There are costs, both financial and mental, that come with turning your home into an office.
Your energy bills may go up
The most obvious cost that comes with being at home all the time? Higher energy bills. After all, when you’re in the office, you’re not the one who’s paying to keep the lights on!
If nobody’s usually home during the day, you’ll find that you have to spend more money than you normally would, to keep the house warm and devices running. In winter 2020, it was estimated that energy bills could climb by 18% for home workers during the coldest months2.
It can be isolating
Home-working can also lead to loneliness – especially if you live alone. Video calls are great, but they’re not quite the same as the many small interactions you’d usually have with co-workers during the day.
Unsurprisingly, a study in September 2020 found that half of Londoners were missing socialising with their colleagues, after months of working solo.
You might find it harder to switch off
When your office is literally inside your home, it can be tricky to keep a work-life balance.
Research by comparison site Finder suggests that 22% of remote workers find it harder to “switch off” at the end of the day.
Costs and savings of working from home
How do the costs of working from home stack up against the savings you could make? According to Finder, the average UK employee can save £44.78 a week by working from home. (For Londoners, that goes up to £57.78 per week.)
Here’s a breakdown of some of the key costs and savings to think about when deciding whether to work from home.
As mentioned above, the most obvious benefit of working from home is that you don’t have to pay to travel anywhere.
The average UK employee spends £146 a month on their commute. That’s about £135,871 by the time you retire. People who travel into London fork out the most, spending an average of £305 per month3.
Imagine what you could do with that extra cash. An extra £1,752, saved over the course of a year, could buy you a fancy new laptop for your home office.
Of course, on the other hand, the biggest cost of working from home could be your energy bills. The good news is that, compared to the savings you could make on commuting, this cost is quite low.
The average cost of energy for people working from home is estimated to be about 18% higher than those not working from home during winter4. This is because you’ll be paying more to keep the house warm while you’re in it all day, and to run all the devices you have plugged in.
If you’re struggling with your energy bills, check out our guides to the Warm Home Discount and Winter Fuel Payment, to see if you might be eligible. Need more support? Head over to our debt and energy assistance FAQs.
Food and drink
Another financial benefit of working from home is the money you’ll likely save on coffee and lunches. When you’re not at the office, surrounded by fast-food outlets, you’re less likely to be tempted to treat yourself to a £2.50 coffee in the morning. Especially when your own kettle is right there!
The downside? If you’re used to getting free snacks or tea and coffee in your office, you’ll now have to foot the bill for those yourself.
Broadband and phone plans
One of the key expenses of working from home is paying for your internet and phone use.
Once you’re using your broadband and phone for work, technically they become business expenses. But working out exactly how much you’ve used can be difficult. That’s why HMRC offers a flat rate of tax relief, to contribute towards your costs. Keep reading to find out how you can claim this.
What expenses can I claim for working from home?
Good news! If you’re working from home, you can claim some tax relief.
This is designed to cover the costs of working from home, like your higher electricity bills, and business phone calls. But working out the exact costs is tricky, so HMRC use a flat rate of £6 a week.
This means that they’ll not tax you on an extra £6 of your salary per week. If you’re a basic rate tax payer, that means you could get an extra £1.20 per week (£62.40 per year).
Even better: you don’t need to show any evidence to claim relief on £6 a week. If you needed to work from home for any amount of time between 6 April 2020 and 5 April 2021, you can claim for the whole year. The same is true for the 2021/2022 tax year.
So: does working from home save you money?
Is it more expensive to work from home? The answer to this question will be different for everyone. It depends on lots of different factors – including:
How far you usually travel to work, and how you get there
Whether you have your heating on while you work
How much you spend on childcare
Other factors, like how much food or coffee you’d normally buy at the office
However, research by software company Protecting in 2020 found that the average UK office employee could save £500 a year by working from home. One in 10 Brits surveyed also said that the money they saved on the commute was their favourite thing about working from home.
Still, there are other factors to consider than money. Emotional wellbeing and productivity are also important, as is the eco-friendliness of remote working.
What’s the environmental impact of working from home?
On the surface, it might seem that working from home is a win for the environment. After all, cutting out the commute means fewer vehicles on the road, which means less pollution and a smaller carbon footprint, right?
That’s true – less commuting can have a significant impact. A 2014 report from the Carbon Trust calculated that if the average UK employee worked from home just 2 days a week, they could save around 390kg of carbon emissions in a year5. (That’s about the same as driving 1,439 miles in a diesel car, which is about as far as London to Gibraltar, Spain.)
But overall, the sustainability of working from home is a bit more complicated. Because while you cut down on your commute, you might also consume a lot more energy by heating and powering your home all day.
Research from London consulting firm WSP suggests that working from home has the best environmental impact during the summer. But if people work from home during the winter, when homes need to be heated, then it actually results in more carbon emissions overall6.
In the future, an increase in electric cars, and other low-carbon modes of transport, could make office-working even more environmentally-friendly than working from home7. In general, it’s a complicated issue that comes down to individual habits, and how much energy you’re using while you’re typing away in your home office.
Want to power your home with greener energy? See how much you could save with one of OVO’s 100% renewable electricity tariffs8.
Tips for saving energy while working from home
With that in mind: how can you keep your carbon footprint and your energy bills down while you’re working from home?
Here are 10 of our top energy-saving tips.
Keep the curtains open: use natural light to brighten up the home as much as possible, rather than relying on lightbulbs. Speaking of which…
Invest in some energy-efficient lightbulbs: these waste far less energy than traditional incandescent bulbs, and should save you money.
Dress in layers: being home all day doesn’t mean you need the heating on all day. Keep a jumper to hand for those chillier afternoons, and check out our guide to keeping warm without using the heating.
Turn devices off at the end of the work day: leaving computers on standby uses a small amount of energy, even though they’re not doing anything. Make sure yours isn’t draining electricity, by switching it completely off at the plug.
Adjust your computer power settings: setting your computer to hibernate whenever you’re taking a break can save energy. Plus, dimming your monitor’s brightness from 100% to 70% can reduce up to 20% of its energy use9. Not to mention, it’s better for your eyes!
Don’t leave mobiles and laptops charging overnight: did you know that once your laptop has finished charging, it will keep using the same amount of power if you leave it plugged in? Many of us are in the bad habit of leaving devices plugged in overnight, but you could shave money off your bills by switching them off once the battery is full.
Green your searches: the search engine Ecosia is a green alternative to major search engines – and they use the profits generated from your searches to plant trees around the world!
Avoid sending unnecessary emails: every time you send an email, ask yourself: does this need to be an email? One message might not make much difference, but if we all get used to saying less online, we could make an impact on our collective carbon footprint.
Air-dry your laundry: tumble-drying is far more energy-intensive than washing. Since you’re around during the day when you work from home, there’s more time for hanging your clothes out to dry in the sun instead. Check out our guide to drying your clothes without a tumble dryer.
Get a smart meter: with a smart meter, you can see exactly how much electricity you’ve used. Knowledge is power: getting this information can help you cut back and save money. Find out more about smart meters, and how to get one installed for free.
For more, read our complete guide to saving energy while staying home, and 120 ways to conserve energy around the house.
Switch to OVO for greener energy
Want to save energy and make a real difference to the carbon footprint of your home?
Here at OVO, we supply all our members with 100% renewable electricity, and we plant a tree for every year that you’re with us.
And if you want to go even further, we offer the OVO Beyond upgrade: it gives you 100% carbon-neutral energy10, including 15% green gas – and we’ll also plant 5 pollution-busting trees for you each year11.
Find out more about how we’re powering homes around the UK with renewables. And get a quote in under 2 minutes, to see how much you could save by switching to OVO.
Sources and references:
8 The renewable electricity we sell is backed by renewable certificates (Renewable Energy Guarantee of Origin certificates (REGOs)). See here for details on REGO certificates and how these work. A proportion of the electricity we sell is also purchased directly from renewable generators in the UK.
10 Enjoy even greener energy with OVO Beyond in comparison with our standard OVO plans. In addition to 100% renewable electricity as available with our standard plans, OVO Beyond reduces your yearly carbon emissions from the energy used in your home that is supplied by OVO to net zero by providing 100% carbon-neutral gas (15% green gas and 85% offset) and offsetting all associated lifecycle carbon emissions involved in the production and consumption of your electricity & gas, you will also get 5 trees per year in UK schools and communities and other green benefits. The renewable electricity we sell is backed by renewable certificates (Renewable Energy Guarantee of Origin certificates (REGOs)). See here for details on Renewable Energy Guarantee of Origin certificates and how these work. The green gas we sell is backed via renewable certificates (Renewable Gas Guarantees of Origin (RGGOs)). See here for details on Renewable Gas Guarantees of Origin and how these work. We offset the remaining emissions by supporting UN REDD+ carbon reduction projects that are certified to the Verified Carbon Standard or the Gold Standard. See here for more information on how we restore nature and protect rainforests with our offsetting programmes.
11 OVO plants 5 trees for every OVO Beyond member through our award-winning I Dig Trees programme with The Conservation Volunteers. Trees absorb carbon dioxide from the atmosphere, so tree-planting helps to slow down climate change. Since 2015 we have planted over 1 million trees.