Simplified expenses are a way of working out how much tax relief you can claim for business expenses. Rather than calculating your actual costs in detail, using simplified expenses means you’ll work out your claim using flat rates which are set by HMRC. You might also see simplified expenses described as the flat rate method.
You don’t have to use simplified expenses to work out your business expenses. If it’s more beneficial for your business, you can claim tax relief on your actual costs instead.
Who can claim simplified expenses?
One of the benefits of operating as a sole trader or in a partnership is that you can claim simplified expenses. Just be careful not to claim the same expenses twice if you run multiple sole trader businesses!
Limited companies (and business partnerships where one of the partners is a limited company) cannot use simplified expenses.
What can I use simplified expenses for?
You can use simplified expenses to work out your tax relief for:
- Using a vehicle in your business
- Costs if you work from home
- Living in the same premises as your business
Simplified expenses for mileage if you use a vehicle for the business
Under simplified expenses you can claim ‘mileage’ by multiplying the number of business miles the vehicle travels by the flat rate the vehicle is eligible for. The rate is designed to include all of the running costs of the vehicle, but it’s still useful to work out your actual costs to make sure you’re claiming whichever amount is higher. We want to make sure you don’t miss out on any tax relief!
It’s worth noting you can apply simplified expenses to one vehicle and work out the actual costs for another, but once you start claiming flat rate expenses for a vehicle you must continue to do so for as long as the business uses the vehicle.
The flat rates you can claim are shown in the table below (and still apply even if you use an electric vehicle). The rates are different for 2026/27, so be sure to check which tax year your journey took place!
| Type of Vehicle | 2025/26 | 2026/27 |
| Cars and goods vehicles (up to 10,000 miles) | 45p | 55p |
| Cars and goods vehicles (after 10,000 miles) | 25p | 25p |
| Motorcycles | 24p | 24p |
| Carrying another employee in your own vehicle | 5p | 5p |
Flat rate expenses for working from home
The flat rate that you can use to work out your expenses for working from home depends on how many hours you actually work from home.
Anything under 25 hours per month and you’re not able to use simplified expenses for your home working costs.
| Hours worked from home per month | Amount to claim per month |
| 25 – 50 | £10 |
| 51 – 100 | £18 |
| 101 or more | £26 |
Limited companies can’t work out a claim using simplified expenses, so you’ll need to use the ‘actual cost’ method to calculate expenses if you operate a limited company from your home.
Claiming when you live at your business premises
Working out the split between personal expenses and business usage can be particularly difficult if you live at your business premises – for instance if you run a Bed & Breakfast from your home – so you are entitled to use simplified expenses instead.
The amount you are able to claim each month partly depends on how many people live on the premises. The flat rate is used to work out how much can be attributed to private use every month.
You’ll need to work out your total costs, then deduct the flat rate and claim whatever is left over as expenses.
| Number of people living on the premises | Amount you can deduct per month from the total cost |
| One person | £350 |
| Two people | £500 |
| Three or more inhabitants | £650 |
For example
You and your partner run a bed and breakfast and live there the entire year. Your overall business premises expenses are £15,000.
You can deduct £500 per month because there are two of you living at the property.
12 months x £500 monthly flat rate = £6,000
£15,000 total costs minus £6,000 = £9,000
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