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  • Rosie Morley

Simplified expenses if you're self-employed

Did you know that if you are self-employed there is a simplified way of calculating some of your business expenses using flat rates instead of working out your actual business costs?

Of course you don’t have to use simplified expenses, you can decide if it suits your business. However you can use these simplified expenses if you are either a Sole traders or Business partnerships that have no companies as partners

Simplified expenses cannot be used by Limited Companies

The types of expenses that you can use flat rates for are:
  • business costs for vehicles

  • working from home

  • living in your business premises

You must calculate all other expenses by working out the actual costs.

So how do I use simplified expenses??

Step 1 - Record your business miles for vehicles, hours you work at home and how many people live at your business premises over the year.

Step 2 - At the end of the tax year use the flat rates for vehicles, working from home and living at your business premises to work out your expenses.

Step 3 - Include these amounts in the total for your expenses in your Self Assessment.

Vehicle Flat rate per mile

Cars and goods vehicles first 10,000 miles - 45p

Cars and goods vehicles after 10,000 miles - 25p

Motorcycles - 24p

Hours of business, Flat rate per month

25 to 50 - £10

51 to 100 - £18

101 and more - £26

The flat rate does not include telephone or internet expenses. You can claim these bills by working out the actual cost.

Living at your business premises

Some people use their business premises as their home e.g. a B&B, small care home etc.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 - £3502 - £500

3+ -£650

For more information please visit HMRC