Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.
You don’t have to use simplified expenses. You have the choice to decide if it suits your business.
Simplified expenses can be used by:
Simplified expenses can’t be used by limited companies or business partnerships involving a limited company.
You can use flat rates for:
You must calculate all other expenses by working out the actual costs.
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You can calculate your car, van or motorcycle expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle, e.g. insurance, repairs, servicing, fuel.
Note: You cannot claim simplified expenses for a vehicle you’ve already claimed capital allowances for (capital allowances include purchased assets that you keep to use in your business), or you’ve included as an expense when you worked out your business profits.
| Vehicle | Flat rate per mile with simplified expenses |
| Cars and goods vehicles first 10,000 miles | 45p |
| Cars and goods vehicles after 10,000 miles | 25p |
| Motorcycles | 24p |
You’ve driven 11,500 business miles over the year.
Calculation:
10,000 miles x 45p = £4,500
1, 500 miles x 25p = £375
Total you can claim = £4,875
You don’t have to use flat rates for all your vehicles. Once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.
All other travel expenses can be claimed. This includes, but is not limited to, train journeys and parking on top of your vehicle expenses.
Calculate your allowable expenses using a flat rate based on the hours you work from home each month.
This means you don’t have to work out the proportion of personal and business use for your home, e.g. how much of your utility bills are for business.
The flat rate doesn’t include telephone or Internet expenses. You can claim the business element of these bills by working out the actual costs.
You can only use simplified expenses if you work for 25 hours or more a month from home.
| Hours of business use per month | Flat rate per month |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 and more | £26 |
You worked 45 hours from home for 9 months, but worked 70 hours during 3 particular months:
10 months x £10 = £100
2 months x £18 = £54
You can claim a Total = £154
A small number of businesses use their business premises as their home. For example a bed and breakfast/guesthouse, or a small care home.
You can use simplified expenses instead of working out the split between what you spend for your private and business use of the premises.
With simplified expenses you calculate the total expenses for the premises.
Then use the flat rates to subtract an amount for your personal use of the premises, based on the number of people living on the premises and claim the rest as your business expenses.
| Number of people | Flat rate per month |
| 1 | £350 |
| 2 | £500 |
| 3+ | £650 |
Lets say that you and your partner run a bed and breakfast and live there the entire year. Your overall business premises expenses are £16,000.
Calculation:
Flat rate: 12 months x £500 per month = £6,000
You can claim:
£16,000 - £6,000 = £10,000
If someone else lives at your business premises for part of the year, you can deduct only the relevant flat rate for the months they lived there.
In this example you and your partner run a bed and breakfast and live there the entire year. Your child studies at university for 9 months a year but comes back to live at home for summer for a total of 3 months.
Calculation:
Flat rate: 8 months x £500 per month = £4,000
Flat rate: 4 months x £650 per month = £2,600
Total = £6,600
You can claim:
£16,000 - £6,600 = £9,400