Simplified Expenses if you are Self-Employed

Self Employed

 

Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out the actual business costs. There is no obligation to use simplified expenses, but for many small businesses it can be a quick and efficient way to claim expenses.

 

 

 

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

 You can use flat rates for:

  • business costs for vehicles
  • working from home
  • living in your business premises

All other expenses must be calculated by working out the actual costs.

 

Vehicles

Calculate your car, van or motorcycle expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle, e.g. insurance, repairs, servicing, fuel.

 

You cannot claim simplified expenses for a vehicle you have already claimed capital allowances for, or that you have included as an expense when you worked out your business profits.

 

Vehicle

Flat rate per mile with simplified expenses

Cars and goods vehicles first 10,000 miles 

45p

Cars and goods vehicles after 10,000 miles

25p

Motorcycles

24p

 

Working from home

Calculate your allowable expenses using a flat rate based on the hours you work from home each month.

 

This means you do not have to work out the proportion of personal and business use for your home for example how much of your utility bills are for business.

 

The flat rate does not 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.

 

Hours of business use per month

Flat rate per month

25 to 50

£10

51 to 100

£18

101 and more

£26

 

Living at your business premises

A small number of businesses use their business premises as their home, such as a guesthouse, bed and breakfast or small care home.

 

You can use simplified expenses instead of working out the split between what you spend for your private and business use of the premises.

 

With simplified expenses you calculate the total expenses for the premises.

 

Then use the flat rates to subtract an amount for your personal use of the premises, based on the number of people living on the premises and claim the rest as your business expenses.

 

Number of people

Flat rate per month

1

£350

2

£500

3+

£650

 

How to use simplified expenses

  1. Record your business miles for vehicles, hours you work at home and how many people live at your business premises over the year.
  2. At the end of the tax year use the flat rates for vehiclesworking from home, and living at your business premises to work out your expenses.
  3. Include these amounts in the total for your expenses in your Self-Assessment tax return.

 

Use the simplified expenses checker on the HMRC website https://www.gov.uk/simplified-expenses-checker to compare what you can claim using simplified expenses with what you can claim by working out the actual costs. This will help you work out if simplified expenses suits your business.

 

For more information on simplified expenses, contact you local Lentells office:

Chard - 01460 64441, chard@lentells.co.uk

Seaton - 01297 20584, seaton@lentells.co.uk

Taunton - 01823 286274, taunton@lentells.co.uk