Self-Employment Tax: Register to Submit / Lesson 6 of 12
Working from home, and mileage
Two of the biggest claims most sole traders forget entirely.
The short answer
- ✓ Home working can be claimed either at a flat monthly rate or as a share of real costs
- ✓ The flat home rate covers heat and power only, not phone or internet
- ✓ Mileage is claimed per business mile and covers the entire cost of running the vehicle
- ✓ Commuting to a regular workplace is not business mileage
Why these two get missed
Home and travel costs do not arrive as invoices addressed to your business. Nobody sends you a bill for the corner of the spare room, and your car does not itemise which trips were work. Because there is no piece of paper prompting you, these two claims are the ones people forget, and together they are often the largest deduction a small sole trader has.
Working from home: two methods
HMRC gives you a choice. The simplified method is a flat monthly amount based on how many hours a month you work from home. The actual-cost method apportions your real household bills.
| Hours worked from home each month | Flat rate you can claim |
|---|---|
| 25 to 50 hours | £10 a month |
| 51 to 100 hours | £18 a month |
| 101 hours or more | £26 a month |
The flat rate covers heating, lighting and power. It does not cover your phone or internet, which you claim separately on a business-use basis.
The actual-cost method
Alternatively, work out the business share of your real household running costs. The usual approach is to apportion by rooms and by time.
Household running costs for the year £3,600
Rooms in the home (excluding kitchen,
bathroom and hallways) 5
One room used for work 1 of 5 = 20%
That room is used for work 60% of the time
Business share £3,600 x 20% x 60% = £432More work, and usually a larger claim than the flat rate, particularly if you work from home full time. Keep the workings, because the calculation is the evidence.
Mileage: the simple method
For vehicle costs, most sole traders use the flat mileage rate rather than apportioning the real running costs of the car. You claim a set amount per business mile, and that covers fuel, insurance, servicing, repairs and depreciation, all of it.
| Vehicle | Rate per business mile |
|---|---|
| Car or van, first 10,000 miles in the year | 55p |
| Car or van, above 10,000 miles | 25p |
| Motorcycle | 24p |
| Bicycle | 20p |
Business miles driven 4,000
Rate for the first 10,000 miles 55p
Claim 4,000 x 55p = £2,200 off your profitTwo rules to note. Once you choose the mileage method for a vehicle you must keep using it for that vehicle for as long as you have it. And commuting from home to a regular workplace is not business mileage, though travel between jobs or to clients is.
The bit HMRC does not spell out
The mileage rate is not a fuel reimbursement. It is designed to cover the whole cost of running the vehicle, including insurance, tax, servicing, tyres and the value the car loses. People compare the rate to what they spent on petrol, conclude it looks generous, and claim conservatively out of a vague sense that it must be too good. It is not: it is meant to cover everything, which is precisely why you cannot also claim repairs and insurance on top.
On the home claim: using a room exclusively for business, with no personal use at all, can affect the Capital Gains Tax position when you sell your home. Ordinary mixed use, a desk in a room that is also used personally, avoids this entirely. This is one of the rare cases where being slightly less tidy is the better answer.
Common mistakes
- Claiming mileage and running costs. The rate already includes them. It is one or the other.
- Claiming commuting. Home to a regular place of work is not business travel.
- No mileage log. Date, journey, purpose, miles. Without it the claim is very hard to defend.
- Never comparing the two home methods. Full-time home workers are often better off on actual costs.
Try it on your own numbers
This is the same calculator as the full tool page, using 2026/27 rates.
Working from home (self-employed)
Which method gives the bigger deduction, HMRC's flat rate or your actual costs?
The flat rate needs at least 25 hours a month.
For the actual-costs method
Heating, electricity, council tax, rent or mortgage interest, water, broadband.
Best deduction
via the method, saving about in tax.
Simplified flat rate
Actual costs
Estimate only. The simplified flat rate covers utilities only, you can still claim a business share of broadband/phone separately. Limited companies use different rules.
Key takeaways
- ✓ Home working can be claimed either at a flat monthly rate or as a share of real costs
- ✓ The flat home rate covers heat and power only, not phone or internet
- ✓ Mileage is claimed per business mile and covers the entire cost of running the vehicle
- ✓ Commuting to a regular workplace is not business mileage
Check you have got it
3 quick questions. No score is kept, and you can change your mind.
1. You claim the flat mileage rate. Can you also claim the cost of servicing and insuring the car?
2. You drive from home to a client, then on to a second client, then home. Which parts are business mileage?
3. What does the flat-rate home working allowance cover?
Sources
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