An author I read (can't remember who) published a formula that you could use to calculate how much a reduction in salary you should accept for a closer job versus farther job based on commute time and distance. There is a site which calculates your commute cost ((distance/mpg*gas price) + parking fees), but doesn't include the time factor which was something like (yearly pay/total hours including commute) vs other job. But there were other factors. Does anyone remember it?
The question is posed in the wrong way: You obviously shouldn't accept a reduced salary. You wouldn't accept £500 less a month than a colleague who lives further away.
You should, when you look for a new job, take all the details into consideration. There's the salary (plus bonuses, plus overtime, plus share options, plus benefits) obviously. There is your cost of getting to and from work and the cost of getting lunch (which may be a lot if you work in a very expensive area). There is the time you spend on your commute. A very important thing to consider is the number of hours that you actually are going to work. Same companies, especially in the USA, want you to work long hours, and suddenly your hourly rate isn't actually very good.
And last, you spend a lot of time at work, which is all part of your life. So try to find a job that you enjoy. Interesting work, challenging work if you prefer that, boring work if that is more what you want. Nice colleagues, nice environment. All that counts just as much as money may count.
Why would you accept a reduction in salary based on your commute time?
If you move farther away and have a longer commute, will your employer give you a raise?
I'm confidident that no, they will not.
The salary should be based purely on your experience, the job duties and level of responsibility, and there should be some consideration for what the going rate is for similar positions in the area. Of course you can also factor in personal interest and convenience when you formulate your desired salary range for a given position, but these are not points you should discuss with the employer as they are of a personal, subjective nature.
Additionally, it is not a foregone conclusion that a job closer to where you live will necessarily pay less than a job that is farther away. If you live in Mountain View and get a job offer over the mountain in Santa Cruz, you're looking at lower salary, with a much longer commute.
There is simply no correlation.
Thus, the answer is there is no formula, and you should not accept any reduction based on your commute time, which is a personal matter.