Simplified expenses for the self-employed

GOV.UK makes them available to sole traders and to business partnerships that have no companies as partners. Limited companies, and partnerships involving a limited company, cannot use them.

They are not an all-or-nothing choice. The flat rates cover only vehicles, working from home and living at your business premises, and all your other expenses are still worked out from the actual costs. You also do not have to use them at all: GOV.UK says simply that you do not have to use simplified expenses. Our guide to allowable expenses for sole traders covers everything outside the flat rates.

Instead of adding up fuel, insurance, repairs and the rest, you multiply your business miles by a flat rate. GOV.UK shows a higher rate for cars and goods vehicles from the 2026 to 2027 tax year, while the rate after 10,000 miles and the motorcycle rate are unchanged. The increase is now law: the Taxation (Energy and Vehicles) Act 2026 replaced 45p with 55p for the 2026 to 2027 tax year and later years, and HMRC's policy paper describes it as retrospective from 6 April 2026. GOV.UK's own worked example shows the effect, with 10,000 business miles at 55p giving a claim of £5,500.

There are some important conditions. Once you use the flat rates for a vehicle, you must continue to do so for as long as you use that vehicle in the business. You cannot use them for a vehicle you have already claimed capital allowances on, or whose costs you have already included as an expense. Cars designed for commercial use, such as taxis and cars used by driving instructors, are excluded. Keep a log of business journeys, because the mileage is the figure your claim rests on.

If you work from home for 25 hours or more a month, you can claim a flat monthly amount instead of working out the business share of your gas, electricity and other household bills. The amount depends on the hours you work at home in each month, so a month with fewer than 25 hours gives nothing.

The flat rate does not include telephone or internet costs. You can still claim the business share of those bills on top, worked out from the actual costs.

Some businesses double as the owner's home, such as a guesthouse, a bed and breakfast or a small care home. In that case you start with your total premises costs and subtract a flat amount for each month to reflect private use, which depends on how many people live there. The rest is claimed as a business expense.

The main appeal is less paperwork. You keep a mileage log and a note of hours worked at home rather than splitting every bill. Whether you pay less tax depends on your circumstances: a cheap, economical car doing many business miles may come out well on 55p a mile, while a home office in a large house with high bills might give a bigger claim on actual costs. Because the vehicle choice is locked in for as long as you keep that vehicle, it is worth comparing both methods before you first claim.

If you would like an accountant to run the comparison for you, see our page on accountants for sole traders. We read every enquiry, and where we can, we will put you in touch with a local accountant; how it works explains the process.