Simplified expenses for the self-employed

There are some simplified arrangements available to the self employed, and to some partnerships for claiming a fixed rate deduction for certain expenses where there is a mix of business and private use. The simplified expenses regime is not available to limited companies or business partnerships involving a limited company.

Simplified flat rates can be used for working from home, and for the business costs of vehicles. This method saves having to calculate the proportion of personal and business use in the home such as for utility bills.

The current monthly flat rates are based on the amount of business use of the home:

  • 25 to 50 hours worked per month can claim – £10.00
  • 51 to 100 hours worked per month can claim – £18.00
  • 101 or more hours worked per month can claim – £26.00

Under simplified expenses, there are the following flat rates per mile available. These rates can be used instead of working out the actual costs of buying and running your vehicle, e.g. insurance, repairs, servicing, fuel.

  • Cars and goods vehicles first 10,000 miles – 45p
  • Cars and goods vehicles after 10,000 miles – 25p
  • Motorcycles – 24p

Whilst using the flat rates is not compulsory, once a decision is made to use the simplification for a specific vehicle, this must continue to be used for a vehicle as long as that vehicle is used for business purposes.

There are also special rules for a small number of businesses that use their business premises as their home, e.g. a guesthouse or small care home. HMRC’s simplified expenses checker can be used to compare what a self-employed person can claim using simplified expenses with what they can claim, by working out the actual costs.

Posted in HMRC notices

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