Deductible Expenses Home Office Vehicle
Deductible expenses home office vehicle means you claim the business share of mixed costs, not the whole household bill and not the whole car. Inland Revenue taxes net profit after those claims on the individual return.
There must be a connection between the use of your home and the business income being generated. If the vehicle is used for business and personal trips, you allocate costs. As a general rule, travelling from home to work is a personal trip.
Home office
Claim a portion of rates, insurance, power, and mortgage interest for the area used for business. Or use Inland Revenue’s square metre rate if the space is set aside and used mainly for business.
2025/26 square metre rate: $57.30. That rate does not cover mortgage interest, rates, or rent. Those still use floor area.
Vehicle
Three ways: logbook with kilometre rates, 25% of running costs if you have no logbook (and can still prove it), or actual costs. Stay with one method for as long as you own that vehicle.
2025/26 petrol: $1.20 then 37 cents. Diesel $1.30 then 38 cents. Petrol hybrid 90 cents then 24 cents. Electric $1.22 then 23 cents.
Official starting point
business.govt.nz: you can only claim 100% of a cost that is entirely for business. If it is partly private, you claim the business proportion. Filing clocks sit on the Self Employed Tax hub. You put the net figure on the IR3.
What you can claim for a home office
Inland Revenue’s home office expenses page: if you are a business owner and use part of your family home for work, you can claim this as a business expense. The portion relates to the area of your home that you use for business. business.govt.nz claiming expenses: examples include rates, power, house and contents insurance, mortgage interest if you own the home, and rent if you rent. Keep invoices.
business.govt.nz example: home 100 square metres, working space 10 square metres, so 10% of the total area. You can claim 10% of expenses that are not solely for business, such as a home phone line. If you are not using a separate area, you need to consider how much time you spend on the business and the area used.
If you are registered for GST, Inland Revenue: the business expenses you claim will not include GST when this applies. If you are not registered, these expenses will include GST. Mortgage interest has no GST. GST input claims on power, internet, and similar bills sit in claiming GST on a car or home office.
Square metre rate option
Instead of splitting every utility bill, you can use the square metre rate if the business area is set aside and used mainly for business. Inland Revenue OS 19/03 CPI 2026: for the 2026 income year (1 April 2025 to 31 March 2026) the rate is $57.30, under section DB 18AA of the Income Tax Act 2007. The rate is based on average utility costs. It does not include mortgage interest, rates, or rent. You still claim a portion of those from floor area.
Inland Revenue’s equation: (a × b) + (c × d). a is mortgage interest, rates, and rent paid in the year. b is the business area divided by the total floor area. c is the square metres used primarily for the business. d is the published square metre rate. If you use this option, you cannot claim any other expenses or depreciation costs related to the business use of your home.
| Tax year Inland Revenue lists | Square metre rate |
|---|---|
| 1 April 2025 to 31 March 2026 | $57.30 per square metre |
| 1 April 2024 to 31 March 2025 | $55.60 per square metre |
| 1 April 2023 to 31 March 2024 | $53.10 per square metre |
You cannot claim depreciation on your home. Depreciation could be claimed before 1 April 2011. If you did that, you include depreciation recovered when you sell the home or stop using it for business. You can still depreciate capital items used for business in the home, such as a computer, office furniture, and fittings. Telephone: 50% of the rental of a landline if it is also your private line. Business related toll calls are 100% deductible. A separate business line can be claimed in full, with an adjustment for private calls. Internet: work out a fair and reasonable business proportion and keep records.
If the business is a company and it pays nothing toward the home office, it cannot claim the expense. If the company reimburses you for a fair amount, that reimbursement can be exempt income for you. The company must keep records of how it arrived at the amount.
What you can claim for a vehicle
Inland Revenue’s vehicle expenses page: if the vehicle is only used for business, you can claim the full running costs. If you use it for business and personal trips, you allocate. There are 3 ways: keeping a logbook, claiming 25% of running costs, or adding up actual costs. If the vehicle is petrol, diesel, hybrid, or electric you can use either the kilometre rate method or actual costs. Continue to use 1 method for as long as you own the vehicle. If it is not petrol, diesel, hybrid, or electric, you must use actual costs.
Inland Revenue publishes kilometre rates after each tax year ends on 31 March, usually by May. The 2025/26 rates were published on 5 June 2026. They are made under section DE 12 of the Income Tax Act 2007. When self employed people use kilometre rates, they do not need to consider GST. Kilometre rates include depreciation. You will not claim a separate depreciation deduction or recovery of depreciation for that vehicle. Parking is deductible to the extent it is incurred in producing assessable income.
| Vehicle type (2025/26 income year) | Tier 1 (first 14,000 km, including private travel) | Tier 2 (after 14,000 km, running costs only) |
|---|---|---|
| Petrol | $1.20 | 37 cents |
| Diesel | $1.30 | 38 cents |
| Petrol hybrid | 90 cents | 24 cents |
| Electric | $1.22 | 23 cents |
Tier 1 is fixed costs plus running costs. Use it for the business portion of the first 14,000 kilometres the vehicle travels in the income year. That 14,000 includes private travel. Tier 2 is running costs only, for the business portion after overall travel exceeds 14,000 kilometres. Use the rates for the year you are claiming. After you have the business share, drop it into the self employed tax calculator as an expense estimate.
Pull highlight: Inland Revenue, keep a logbook for at least 90 consecutive days. You can use that proportion for up to 3 years if business use does not change by more than 20%.
Inland Revenue use a logbook: record the start date and odometer, the date, distance, and reason for each business journey, and the end date and odometer. Add up business distance as a proportion of total distance. Allocate that proportion of petrol, Warrant of Fitness, maintenance and repairs, insurance, and parking. After 3 years, keep a logbook for another 90 days. If no logbook is kept, the claim is limited to 25% of running costs. You may still be asked to substantiate the percentage. Before the 2018 income year, kilometre rate claims were limited to 5,000 kilometres. That cap is not the current rule.
Actual costs: keep accurate records of private and work related expenses, including petrol, Warrant of Fitness, maintenance, insurance, and parking. Show the reasons for business travel and the distances of all journeys. You can also claim depreciation on the business use of the vehicle if you are not on kilometre rates.
Trap: the commute is private unless an IS 25/01 exception applies
Inland Revenue: travelling from home to work is a personal trip. r/PersonalFinanceNZ threads that claim 1 day in 7, or 100% of a mixed use ute, skip that test. IS 25/01: the courts treat home to work travel as private, with four exceptions where the travel is on work (essential equipment, itinerant work, emergency calls, home as a workplace). Choosing to do invoicing at home does not, by itself, turn the drive into a business journey.
When home to work travel can be on work
Inland Revenue IS 25/01 (15 January 2025) applies to self employed people, partners, and some close companies using subpart DE. A journey is a business journey only if the whole journey is wholly in deriving income. You cannot split one trip into half business and half private under that specific rule. Incidental private use that does not add distance does not kill a business journey.
IS 25/01 example 2, labelled: a sole trader electrician with a van, a garage workshop, no separate business premises, travelling from home to the first customer then on to other sites and home again. Inland Revenue treats that travel as business travel. The home is the base of operations. Travel is essential. Locations vary. The electrician is travelling on work from leaving home until returning. That is not the same as driving to an employer’s office, or choosing to do admin at the kitchen table after a day on a client site.
Use case: labelled example, Hamilton designer
Situation: sole trader invoices from a spare room. Home 100 square metres. Room 10 square metres. Same numbers as the business.govt.nz floor area example. They also drive a petrol car to client meetings, mixed with school runs.
Home office: 10% of shared household costs, or the square metre rate of $57.30 on the 10 square metres plus 10% of mortgage interest, rates, or rent. Do not depreciate the house. Do not double claim utilities if you pick the square metre option.
Action: keep a 90 day vehicle logbook before claiming more than 25%. Pick kilometre rates or actual costs and stay with that method. Show net profit after those claims on the IR3 filing checklist for sole traders. Cash for the leftover tax sits in how much tax to set aside NZ sole trader.
How you claim, and what records to keep
business.govt.nz: claim business expenses annually in your tax return. Deduct them from what you earned. You must have a record, or Inland Revenue may not allow the claim. Copy income and expenses into a financial statements summary (IR10), or send a summary of accounts. Keep tax records for seven years, in English unless Inland Revenue approves another language. Pay work related costs through a business account where you can, so the trail is clear. Expenses can only be claimed once. Do not claim the same petrol under kilometre rates and again as an actual cost.