Could simplified expenses save you time and money?

Self-employed people can choose to use simplified expenses to calculate certain business costs using flat rates rather than working out their actual expenses.

The system can save time and make record keeping easier, but it will not necessarily produce the best tax position. It is therefore worth comparing the flat rates with the actual costs before deciding whether it suits your business.

Simplified expenses are available to sole traders and partnerships that have no companies as partners. They cannot be used by limited companies or partnerships involving a limited company.

Flat rates can be used for certain vehicle costs, working from home and living at business premises. Other expenses must generally be calculated using the actual costs.

For vehicles, the 2026-27 rate for cars and goods vehicles is 55p per business mile for the first 10,000 miles, falling to 25p per mile thereafter. Motorcycles qualify for 24p per mile.

For working from home, the monthly flat rate is £10 for 25 to 50 hours, £18 for 51 to 100 hours and £26 for 101 hours or more.

Businesses operating from premises that are also the owner's home can also use flat rates to account for private use, depending on the number of people living there.

Records of business mileage, home-working hours and people living at business premises should still be kept. Using HMRC's simplified expenses checker can also help compare the flat-rate method with claiming actual costs before making a decision.