What simplified expenses are
Normally you work out the actual cost of business expenses. For three things, HMRC lets sole traders use flat rates instead:
- vehicle mileage
- working from home
- living at your business premises
Everything else, you claim at actual cost. Simplified expenses are optional. GOV.UK has a simplified expenses checker to compare them with what you could claim by working out the actual costs.
Mileage rates
You claim a flat rate per business mile instead of fuel, insurance, repairs and servicing.
| Vehicle | 2026/27 | Before 6 April 2026 |
|---|---|---|
| Cars and goods vehicles, first 10,000 miles | 55p | 45p |
| Cars and goods vehicles, after 10,000 miles | 25p | 25p |
| Motorcycles | 24p | 24p |
So for your 2025/26 return, due 31 January 2027, use 45p. For 2026/27, use 55p.
11,000 business miles by car (GOV.UK's example)
For a basic rate taxpayer, £1,000 more in expenses means £260 less income tax and Class 4 National Insurance (20% + 6%).
The rules
- You can use it for cars, vans and other goods vehicles, and motorcycles. Not for cars designed for commercial use, such as black cabs or dual-control driving instructor cars.
- You cannot use it for a vehicle you have already claimed capital allowances on, or included as an expense.
- Once you use flat rates for a vehicle, you must keep using them for as long as you use that vehicle for the business.
- You can still claim parking and other travel, like train fares, on top.
Keep a record of your business journeys and miles through the year, so the figure on your return is easy to back up.
Working from home
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 bills.
| Hours of business use a month | Flat rate a month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 and more | £26 |
You work it out month by month. GOV.UK's example: 10 months at 25 to 50 hours and 2 months at 51 to 100 hours.
The most you can claim this way is 12 × £26 = £312 a year. The flat rate does not cover phone or internet. Claim the business share of those separately, at actual cost.
Working out the actual business share of your home costs may give a different figure. The flat rate is simpler, because you do not have to split your bills between personal and business use.
Living at your business premises
This is for the few businesses where the premises are also home, such as a guesthouse, bed and breakfast or small care home. You add up all the premises costs, then take off a flat amount for private use.
| People living there | Taken off per month |
|---|---|
| 1 | £350 |
| 2 | £500 |
| 3 or more | £650 |
GOV.UK's example: a couple run a B&B with £15,000 of premises costs. 12 × £500 = £6,000 for private use, so they claim £9,000.
The £1,000 trading allowance
The trading allowance is a tax exemption of up to £1,000 a year on trading income. It is useful for small side businesses.
- If your trading income is £1,000 or less, the allowance can cover all of it.
- If it is more, you can deduct £1,000 instead of your actual expenses. You cannot claim both.
- If your expenses are more than £1,000, claiming expenses is usually better.
- You cannot use it for income from a partnership.
Side business with £4,000 income and £300 of costs
The same choice flips the other way if costs are high. With £4,000 income and £1,800 of costs, expenses give £2,200 of profit and the allowance gives £3,000, so expenses win.
You also need to register and send a return if self-employed income is more than £1,000, before taking off anything you can claim.
How Sole Sums helps
The free app keeps an income and expense log with HMRC-style categories, so you can see whether expenses or the allowance gives the lower profit. Pro (a one-off £4.99 on iOS and Android) adds a mileage calculator and a use-of-home calculator that apply the HMRC flat rates, plus CSV and PDF export.
Log your miles and expenses
See how much simplified expenses take off your bill. Free, offline, no account.
Open the web app