Home Office and Vehicle Expenses
🏡 Claiming a Home Office
If you run a business or work for yourself from home, you can claim a fair share of your household costs as a business expense. The same goes for using your own vehicle for work. The key idea is apportionment: you only claim the business portion, and you keep records to back it up.
The Apportionment Idea
Household and vehicle costs are usually mixed business and private. You work out the business proportion and claim only that. For a home office the common measure is floor area; for a vehicle it is business kilometres.
What You Can Include for a Home Office
| Cost | Claimed On |
|---|---|
| Power and heating | The business-use percentage |
| Internet and phone | The business-use portion |
| Rates and house insurance | The business-use percentage |
| Mortgage interest or rent | The business-use percentage, with rules |
📐 Home Office Methods
The Floor Area Method
Measure the area used regularly for the business as a percentage of the total floor area of your home. Apply that percentage to your household running costs.
The Square Metre Rate Option
Inland Revenue publishes a square metre rate that lets you claim a set amount per square metre of business space for the utility-type costs, on top of a separate claim for the premises costs like rates, insurance, and interest based on your business-use percentage. This can be simpler than tracking every utility bill.
Keep It Reasonable and Recorded
The space should be genuinely used for the business. Keep a note of the measurements and the bills you are apportioning, so the claim stands up if questioned.
🚗 Vehicle Expenses
Two Main Methods
If you use your own vehicle for work, you choose between keeping a logbook to find your actual business-use percentage, or using the kilometre rate for your business travel.
| Method | How It Works |
|---|---|
| Logbook | Record trips over a test period to set a business-use percentage, then claim that share of actual running costs |
| Kilometre rate | Multiply business kilometres by the published rate per kilometre |
The Logbook Method
You keep a logbook for a representative period to establish what percentage of your driving is for business. That percentage is then applied to your real vehicle costs, such as fuel, servicing, registration, insurance, and depreciation, until it needs refreshing.
The Kilometre Rate Method
Instead of tracking every cost, you record your business kilometres and multiply by the published rate, which is designed to cover running costs. It is simpler but you still need a record of business travel.
💡 Records and Common Mistakes
Records You Need
- Home office: measurements and the bills you apportion
- Vehicle: a logbook or a record of business kilometres
- Receipts and invoices for the costs claimed
- A clear, consistent basis for the business-use percentage
Common Mistakes
Mistake 1: Claiming the Whole Bill
You can only claim the business portion of mixed costs, not the full household or vehicle expense.
Mistake 2: No Records
Without measurements, a logbook, or receipts, claims can be denied on review. Records make the claim real.
Mistake 3: Letting the Logbook Go Stale
A logbook percentage is valid for a period and then needs refreshing if your travel pattern changes.
Mistake 4: Mixing Methods Carelessly
Pick a consistent method for the vehicle and apply it properly, rather than switching in ways that do not stack up.
A Simple Approach
See our Self-Employed Tax material for the wider picture. Final word: home office and vehicle claims come down to working out a fair business-use share and backing it with records. Use the floor area or square metre rate for home, and the logbook or kilometre rate for the vehicle, and only claim the business portion. This is general information, not tax advice; the published rates change, so confirm the current figures.
🎯 Test Your Knowledge
Quiz on Home Office and Vehicle Expenses (20 Questions)
Related guides
- Claiming Vehicle Expenses Guide, a related guide in the same area.