Simplified Expenses

HMRC's simplified expenses scheme allows self-employed individuals to use fixed flat rates for certain business costs instead of calculating and apportioning actual expenses. The scheme reduces administrative burden and simplifies record-keeping, though it may not always produce the most tax-efficient result. Understanding when simplified expenses make sense — and when to use actual costs instead — is important for managing your tax bill.

Vehicle Expenses

Under simplified expenses, you can claim a flat rate per business mile driven: 45p per mile for the first 10,000 miles and 25p per mile thereafter in a tax year. This flat rate covers all running costs including fuel, insurance, servicing, repairs, and depreciation. You need only keep a simple mileage log showing the date, destination, purpose, and mileage for each business journey. The scheme is available for cars and goods vehicles. If you use the simplified rate, you cannot also claim capital allowances on the vehicle or deduct actual running costs.

Home Office Flat Rates

Instead of calculating the actual proportion of household costs used for business, you can claim a flat weekly amount based on the hours you work from home. For the 2025–26 tax year, the rates are: £6 per week for 8–24 hours of business use per month, £12 per week for 24–50 hours, and £26 per week for 50+ hours. The flat rate covers all home office costs including rent, council tax, utilities, and insurance. If you use the flat rate, you cannot also claim separate home office costs through actual apportionment.

Private Use of Business Premises

If you use part of your home exclusively for business (rather than just working from home occasionally), you may need to consider the private use adjustment for business premises used partly as a home. Simplified expenses provide a framework for calculating the adjustment without a detailed apportionment of every cost. The scheme is most beneficial when the business use of a property is relatively small and the cost of calculating actual apportionment would be disproportionate.

Eligibility

Simplified expenses are available to sole traders and business partnerships (but not limited companies). You can use the scheme for some expenses and not others — for example, you could use simplified mileage for your van but calculate actual costs for your office. However, once you choose the simplified method for a particular expense, you must apply it consistently for that vehicle or property throughout the tax year. You cannot switch between methods for the same expense within a year.

When to Use Simplified Versus Actual Costs

Simplified expenses are most beneficial when: actual costs are low relative to the flat rate (for example, a fuel-efficient car where the 45p rate is generous); record-keeping is limited; or your home business use is irregular. Actual costs are better when: your vehicle is expensive to run (high depreciation or high mileage); your home office represents a significant proportion of household costs; or you run a high-turnover business where precise cost allocation matters for tax planning.