Home Office and Mileage: Two Common Self-Employed Deductions Explained
Quick Answer
If you work from home, you can claim either a simplified flat rate or a proportion of actual costs for things like heat, light, and broadband. For driving, you can claim mileage allowance (a flat rate per mile) or actual vehicle costs—but not both. The key is keeping good records.
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Part 1: Home Office Expenses
If you work from home—whether full-time or part-time—you can claim for the business use of your home. There are two approaches.
Option A: Simplified Expenses (Flat Rate)
HMRC offers a flat-rate deduction based on the hours you work from home each month:
| Hours worked from home per month | Flat rate you can claim |
|---|---|
| 25–50 hours | £10/month |
| 51–100 hours | £18/month |
| 101+ hours | £26/month |
This is easy to calculate and requires less record-keeping. But it may be less than your actual costs.
Example: If you work from home full-time (160+ hours/month), you'd claim £26 × 12 = £312/year.
Option B: Actual Costs (Proportion Method)
Calculate the business proportion of your actual household costs:
- List your home costs: rent/mortgage interest, utilities, council tax, insurance, broadband
- Work out the business-use percentage (by rooms, floor area, or hours)
- Claim that percentage
Example:
- Total annual home costs: £8,000
- You use 1 room out of 5, for 40% of your time
- Calculation: £8,000 × (1/5) × 0.4 = £640
This requires more record-keeping but can result in a higher claim.
Which Should You Choose?
- Simplified is easier but often lower
- Actual costs requires more effort but may save more tax
You can choose differently each year, but you can't mix methods within the same year.
Part 2: Mileage and Vehicle Expenses
If you use a car, van, or motorcycle for business, you can claim for it. But first, you need to understand what counts as "business travel."
What Counts as Business Travel?
✅ Allowable:
- Driving to a client's site
- Travelling to a meeting or networking event
- Visiting suppliers or collecting materials
- Travelling between temporary workplaces
❌ NOT allowable:
- Commuting from home to your regular place of work
- Personal errands, even if they're on the way
The commuting question: If you work from home and travel to a client's office, that's usually business travel. But if you have a regular external office you go to daily, the journey there is commuting—and not deductible.
Option A: Mileage Allowance
Use HMRC's approved mileage rates:
| Vehicle | First 10,000 miles | After 10,000 miles |
|---|---|---|
| Car | 45p per mile | 25p per mile |
| Motorcycle | 24p per mile | 24p per mile |
| Bicycle | 20p per mile | 20p per mile |
This covers fuel, insurance, servicing, and wear and tear—all in one flat rate.
Example: You drive 6,000 business miles in a year.
- 6,000 × 45p = £2,700 you can claim
Option B: Actual Vehicle Costs
Instead of mileage allowance, you can claim the actual costs of running your vehicle, including:
- Fuel
- Insurance
- Repairs and servicing
- Road tax
- MOT
- Finance interest (not capital)
Then calculate the business-use percentage based on your mileage log.
Example:
- Total vehicle costs: £4,000/year
- Business miles: 8,000 out of 12,000 total (67%)
- Claim: £4,000 × 0.67 = £2,680
Which Should You Choose?
- Mileage allowance is simpler and often better for smaller vehicles
- Actual costs may be better for expensive vehicles or high mileage
Once you choose a method for a vehicle, you must stick with it for as long as you use that vehicle for business.
Worked Example: Combining Both Deductions
Priya is a freelance consultant who works from home and visits clients.
Home office:
- Works from home 120 hours/month
- Claims simplified rate: £26 × 12 = £312
Mileage:
- Drives 5,000 business miles
- Claims mileage allowance: 5,000 × 45p = £2,250
Total deductions: £2,562
This reduces her taxable profit—saving her around £650 in tax and NI.
Record-Keeping Tips
For Home Office
- Note your working hours if using simplified expenses
- Keep utility bills if using actual costs
- Take a photo of your workspace setup (useful if HMRC queries)
For Mileage
Keep a mileage log with:
- Date of journey
- Start and end locations
- Purpose (e.g., "client meeting")
- Miles travelled
You can use a spreadsheet, app, or notebook. The key is consistency.
General
- Keep records for at least 5 years
- Digital copies (photos of receipts, scanned documents) are fine
- Bank statements can support claims but receipts are better
Common Mistakes
1. Claiming commuting as business travel
If you go to the same external location every day, that's commuting—not business travel.
2. Mixing mileage and actual costs
You can only use one method per vehicle. Switching mid-year will cause problems.
3. Not keeping a mileage log
Without records, you can't prove your claim if HMRC asks.
4. Forgetting to claim home office at all
Many people don't realise they can claim—even the simplified rate adds up.
5. Overclaiming the business portion
Be realistic about how much of your home/car use is genuinely for business.
FAQ
Can I claim for working from home if I only do it part-time?
Yes. Even a few hours a week qualifies. Use the simplified rates based on your monthly hours.
Is commuting tax deductible?
No. Travel from your home to a regular workplace is not allowable.
Do I need receipts for mileage claims?
Not for fuel if you use the mileage allowance—but you do need a log of your journeys.
Can I claim car finance?
If using actual costs, you can claim the interest portion of a loan or HP—but not the capital repayment. Leasing payments may be claimable in full (proportioned for business use).
What if I use my car for both business and personal?
Calculate the business percentage based on miles driven and claim only that portion.
Can I switch from mileage to actual costs?
Not for the same vehicle. Once you've chosen a method, you're locked in for that vehicle.
How do I prove my home office?
A photo of your setup and records of your working hours or utility bills.
Can I claim broadband?
Yes—as part of home office costs. Estimate the business-use percentage.
What if I rent and work from home?
You can claim a portion of your rent as part of actual home office costs.
Can I claim a bicycle for business travel?
Yes—20p per mile if you cycle for business purposes.
Next Steps
Make sure you're claiming all the home and travel expenses you're entitled to.
Also read our guide to all allowable expenses and learn how much tax to set aside.
Back to the Learn hub.
This guide is for general information only. Tax rules change, and everyone's situation is different. Always check the latest HMRC guidance and consider speaking to a qualified accountant if you're unsure.