Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.
You don’t have to use simplified expenses. You can decide if it suits your business.
Who can use simplified expenses?
Simplified expenses can be used by:
- Sole traders
- Business partnerships that have no companies as partners
Simplified expenses can’t be used by limited companies or business partnerships involving a limited company.
Types of expenses
You can use flat rates for:
- Business costs for vehicles
- Working from home
- Living in your business premises
You must calculate all other expenses by working out the actual costs.
How to use simplified expenses
Record your business miles for vehicles, hours you work at home and how many people live at your business premises over the year.
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.
Working from home
Calculate your allowable expenses using a flat rate based on the hours you work from home each month.
This means you don’t have to work out the proportion of personal and business use for your home, eg how much of your utility bills are for business.
The flat rate doesn’t include telephone or internet expenses. You can claim the business proportion of these bills by working out the actual costs.
You can only use simplified expenses if you work for 25 hours or more a month from home:
- 25 to 50 Hours of business use per month = £10 Flat rate per month
- 51 to 100 Hours of business use per month = £18 Flat rate per month
- 101 and more Hours of business use per month = £26 Flat rate per month
Example: You worked 40 hours from home for 10 months, but worked 60 hours during 2 particular months:
- 10 months x £10 = £100
- 2 months x £18 = £36
- Total you can claim = £136