Glossary · UK
What is Simplified Expenses?
A set of flat-rate deductions that let sole traders and partnerships claim certain business costs without working out actual amounts.
Full Definition
Simplified expenses are optional flat rates that self-employed sole traders and partnerships (but not limited companies) can use to claim certain business costs, avoiding detailed apportionment of actual expenditure. There are three areas. For business mileage, the flat rate is 45p per mile for the first 10,000 business miles in a tax year and 25p per mile thereafter for cars and vans, and 24p per mile for motorcycles; using this rate means actual running costs and capital allowances on the vehicle cannot also be claimed. For working from home, a monthly flat rate based on hours worked at home applies: 10 for 25 to 50 hours, 18 for 51 to 100 hours, and 26 for 101 or more hours per month, covering heat, light and power but not phone or internet. For premises used partly as a home, such as a guest house, a flat private-use adjustment is deducted based on the number of occupants. Simplified expenses can be combined with normal actual-cost claims for other items. They sit alongside, but are separate from, cash basis accounting and the trading allowance. HMRC provides a checker because the flat rates are not always more generous than claiming actual costs.