Simplified Expenses for the Self-Employed: Flat-Rate Mileage and Home-Use Rates (2026/27)
HMRC's simplified expenses let sole traders use flat mileage and home-use rates instead of calculating actual costs. Here's every flat rate for 2026/27 and when actual costs work out better.
Why simplified expenses exist
Calculating the exact business proportion of vehicle running costs, fuel, insurance, depreciation, and home utility bills is genuinely time-consuming for a small business, and often produces a similar answer to a much simpler flat-rate calculation. HMRC's simplified expenses scheme lets eligible sole traders and partnerships use standard flat rates instead, avoiding the need to track and apportion every individual receipt.
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Open Self-Employed Tax calculatorMileage flat rates for 2026/27
| Vehicle | First 10,000 business miles | After 10,000 miles |
|---|---|---|
| Cars and vans | 45p per mile | 25p per mile |
| Motorcycles | 24p per mile (no tiering) | 24p per mile |
| Bicycles | 20p per mile (no tiering) | 20p per mile |
These flat rates are intended to cover all vehicle running costs — fuel, insurance, servicing, repairs, and depreciation — in a single figure per mile. You cannot claim actual fuel receipts, insurance, or capital allowances on top of the flat mileage rate for the same vehicle; it's one method or the other.
Worked example: 12,000 business miles in a car
| Miles | Rate | Amount |
|---|---|---|
| First 10,000 miles | 45p | £4,500 |
| Remaining 2,000 miles | 25p | £500 |
| Total claim | £5,000 |
This £5,000 is deducted from your taxable profit as a business expense, without needing to separately track fuel receipts, MOT costs, insurance premiums, or calculate a capital allowance for the vehicle itself.
Home-use flat rates for 2026/27
| Hours worked from home per month | Flat rate |
|---|---|
| 25 to 50 hours | £10/month |
| 51 to 100 hours | £18/month |
| 101 or more hours | £26/month |
These flat rates cover the variable running costs of working from home — additional heating and electricity, broadly — but explicitly exclude fixed costs like rent, mortgage interest, and council tax, which are not usage-dependent in the same way. If you want to claim a proportion of those fixed costs too, you need to calculate them separately using an actual-cost, floor-area or room-based apportionment method, alongside (not instead of) the simplified flat rate for the variable costs.
Worked example: working from home 80 hours a month, 12 months a year
| Item | Calculation | Amount |
|---|---|---|
| Simplified flat rate (51-100 hrs band) | £18 × 12 months | £216 |
| Additional fixed-cost claim (e.g., 1 room of 5 used 40% business use) | Calculated separately from actual bills | Varies |
Choosing simplified vs actual costs — independently
A frequently overlooked feature of simplified expenses is that you can pick the method separately for mileage and for home costs. You might, for example, use the 45p/25p flat mileage rate for your car, while calculating actual costs for your home office based on floor area and actual utility bills, if that combination produces a better (and more defensible) result for your specific circumstances.
| Category | Simplified expenses available? | Notes |
|---|---|---|
| Vehicle mileage | Yes | Choose per vehicle; cannot switch methods for the same vehicle later while still owned |
| Working from home | Yes | Choose independently of the mileage method |
| Living on business premises (e.g. guesthouse owners) | Yes | Separate flat-rate table for personal-use adjustment |
When actual costs work out better
Simplified expenses are designed for administrative ease, not to maximise every possible deduction. Actual costs tend to produce a larger deduction (and are worth the extra record-keeping) in these situations:
- High-mileage drivers with expensive or fuel-inefficient vehicles — the flat 45p/25p rate is a blended average and doesn't reflect the true running cost of, say, a large 4x4 doing heavy annual mileage.
- Recently purchased vehicles with significant capital allowances available — the flat mileage rate already bakes in an assumed depreciation cost, so you lose the ability to claim a larger, more specific capital allowance in the year of purchase.
- High actual home-running costs — a dedicated home office extension, or unusually high heating costs in a large property, may exceed what the flat monthly rate would give you.
Who can use simplified expenses
Simplified expenses are available only to sole traders and business partnerships where all partners are individuals (not a company partner). Limited companies must always calculate actual costs and apply standard capital allowances and benefit-in-kind rules instead — simplified expenses are specifically a small-business, unincorporated-trader simplification.
Use our self-employed tax calculator to see how simplified expenses affect your taxable profit, and our MPG calculator to help estimate whether your actual fuel costs would exceed the flat mileage rate for your vehicle and typical mileage.
Frequently asked questions
What mileage rate can self-employed people claim under simplified expenses?
45p per mile for the first 10,000 business miles in a tax year, then 25p per mile after that, for cars and vans. Motorcycles are a flat 24p per mile with no mileage tiering.
What is the flat rate for working from home under simplified expenses?
The flat rate depends on hours worked from home per month: £10/month for 25-50 hours, £18/month for 51-100 hours, and £26/month for 101+ hours. This covers heating, electricity and similar running costs, but not rent, mortgage interest, or council tax, which are calculated separately if claimed.
Can I use simplified expenses for mileage but actual costs for home working?
Yes. You can choose the simplified or actual cost method independently for mileage and for home-use expenses — you don't have to use the same method for both categories, though within each category you generally can't switch methods for the same vehicle year to year.
Is simplified expenses mileage the same as the employer mileage allowance?
Yes, the rates are identical to HMRC's Approved Mileage Allowance Payments (AMAP) rates used for employees: 45p/25p tiered for cars and vans, 24p for motorcycles, 20p for bicycles.
When is claiming actual costs better than simplified expenses?
Actual costs tend to work out better for higher-mileage drivers with expensive, fuel-inefficient, or newly purchased vehicles (where capital allowances and finance costs are significant), and for people working from home with unusually high specific costs like a dedicated separate office extension.
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