Simplified Expenses

Simplified Expenses are HMRC's flat-rate alternative to apportioning actual business + private use costs for self-employed people. Three categories: (1) WORKING FROM HOME, £10/month (25-50 hours/month), £18/month (51-100 hours), £26/month (101+ hours); minimum 25 hours/month business use required. (2) VEHICLE MILEAGE, 45p/mile for cars + vans on first 10,000 business miles (RISING to 55p from 6 April 2026 per Reeves 20 May 2026 announcement); 25p/mile above 10,000; 24p/mile motorcycles; once you elect mileage on a vehicle you're locked in for the life of that vehicle. (3) LIVE AT BUSINESS PREMISES, £350/month (1 person), £500/month (2 people), £650/month (3+ people); deducted from total premises costs to find private-use proportion. Choice is annual + per category. Simplified Expenses run independently of cash basis vs accruals choice, claimable under either.

Last reviewed: 23 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

What this relief is, in plain English

Simplified Expenses solves the apportionment problem for self-employed people. Instead of calculating the precise business proportion of home utilities, vehicle running costs, or live-at-business-premises overheads, you use HMRC's pre-set flat rates. The administrative simplicity is the main attraction, no apportionment to defend on enquiry, no detailed records of business vs private use beyond mileage logs. The three categories are designed for distinct sole-trader contexts. WFH flat rates (£10-£26/month) cover working from home a defined number of hours, the minimum 25-hour-month threshold means under-25-hour users get nothing under simplified expenses + must use actual cost apportionment. Mileage rates (45p/25p, rising to 55p/25p from April 2026) cover the cost of using your own car or van for business, replacing fuel + insurance + servicing + depreciation calculations with a simple per-mile rate. Live-at-business-premises rates (£350-£650/month) cover the rare scenario of someone running a B&B, guesthouse, or pub from their main residence, deducting a flat private-use amount from total premises costs to find the deductible business portion. The two practical traps: (1) vehicle mileage election is locked once made, you can't switch back to actual costs on the same vehicle, so consider carefully which method serves you better over the typical 5-10-year vehicle life. (2) The simplified rates haven't been uprated in years (except AMAP from April 2026), many sole traders find actual cost apportionment gives a higher deduction, particularly for WFH with substantial dedicated office space + heavy utility usage.

How it works

WFH flat rates by monthly hours

**25-50 hours/month business use**: £10/month deduction. **51-100 hours/month**: £18/month. **101+ hours/month**: £26/month. Minimum 25 hours required, under 25 = no simplified deduction (must use actual cost apportionment). Maximum simplified rate £26/month = £312/year. Election is annual + per tax year, recalculate if hours change significantly. Hours mean GENUINE business activity in the home, not casual or occasional use. The simplified rate covers heating, lighting, council tax (limited), water, broadband, NO additional deductions for utilities apportionment if simplified rate elected.

Vehicle mileage, 45p/25p (2025/26) → 55p/25p (from April 2026)

**Cars + vans 2025/26**: 45p/mile first 10,000 business miles; 25p/mile above. **Cars + vans from 6 April 2026 (Reeves 20 May 2026 announcement)**: 55p/mile first 10,000 business miles; 25p/mile above, backdated to start of 2026/27 tax year. **Motorcycles**: 24p/mile (flat, unchanged). The 10,000-mile threshold resets each tax year per vehicle. ELECTION LOCK: once you choose mileage for a specific vehicle, you're locked in for the life of that vehicle. Two-vehicle rule: you can have mileage on one vehicle + actual costs on another. Mileage log required, date, destination, business purpose, miles per journey (HMRC standard for audit defence).

Live-at-business-premises adjustment

Applies to sole traders running B&Bs, guesthouses, pubs, or similar from their main residence. Calculate TOTAL premises costs (mortgage interest within s.272A limits / rent / utilities / repairs / insurance), then DEDUCT a flat amount representing private use. **1 person living there**: £350/month deducted from premises costs. **2 people**: £500/month. **3+ people**: £650/month. Net of the deduction = the business-claimable portion. Useful where the genuine private-use proportion would be hard to calculate accurately (overlapping family + business use of common spaces).

Election timing + interaction with actual costs

Election is annual + per category, choose simplified OR actual each year, each category independently. Vehicle mileage is the exception: locked for the life of the vehicle once elected. WFH simplified vs actual: compare both, elect whichever gives bigger deduction. Most sole traders with dedicated home office space + significant utility costs find actual cost apportionment gives more, but only if records support the apportionment. Live-at-business-premises is only relevant for the narrow B&B/guesthouse population. Simplified Expenses run alongside Cash Basis or Accruals choice, both compatible with either.

Who qualifies

Sole trader or unincorporated partnership (employees + Ltd Co directors use different mechanisms)
WFH category: minimum 25 hours/month genuine business use at home
Vehicle category: vehicle owned (or privately leased) by the sole trader, used for genuine business travel + mileage log maintained
Live-at-business-premises category: business genuinely operating from the residential premises (B&B, guesthouse, pub, similar)
Election per category, annual basis; vehicle mileage election is locked for life of vehicle
Compatible with both Cash Basis + Accruals accounting basis

Interactions with other reliefs

Trading Allowance (£1,000)

Trading Allowance + Simplified Expenses are mutually exclusive on the same trade in the same year. Claiming the £1,000 allowance precludes claiming actual or simplified expenses; opting for expenses (simplified or actual) precludes the Trading Allowance. Compare both routes annually to choose the higher-deduction position.

AMAP (Approved Mileage Allowance Payments)

AMAP is the EMPLOYEE / DIRECTOR equivalent of sole-trader simplified vehicle mileage. Same rates (45p/25p in 2025/26, rising to 55p/25p from April 2026), they were aligned historically + are likely to remain aligned post-April 2026 (though set separately). Mechanically identical; different statutory basis (employment ITEPA 2003 vs trading ITTOIA 2005).

Capital Allowances on vehicles

Mutually exclusive on a per-vehicle basis. Choosing MILEAGE under simplified expenses means NO capital allowances on the vehicle. Choosing ACTUAL costs means full capital allowances via main pool 18% / special rate pool 6% / EV FYA 100% (for new zero-emission cars). The choice is locked for the vehicle's life in the business. For high-mileage business users with cheap-to-buy used cars: mileage often wins. For low-mileage users with expensive new EVs: actual + EV FYA often wins.

Cash Basis vs Accruals

Simplified Expenses work with either basis. Most cash-basis sole traders use simplified expenses for the simplicity match; accrual-basis sole traders often use actual cost apportionment to match the matching-principle approach. Combination is purely a personal preference + administrative-burden trade-off.

Common mistakes + audit triggers

Falling below the 25-hour/month minimum threshold + still claiming WFH simplified (must use actual cost apportionment for under-25-hours)
Treating the simplified WFH rate as covering broadband + telephone (it doesn't include those, claim separately under business use proportion of communications)
Switching back to actual costs on a vehicle after electing mileage (locked for life of vehicle, irreversible)
Claiming home-to-regular-business-premises mileage (Samadian principle, that's commuting, not business)
Not maintaining a contemporaneous mileage log (date, destination, purpose, miles per journey, HMRC will challenge unsupported claims)
Confusing the £6/week employee WFH rate with sole-trader simplified rates (different schemes, sole traders use £10-£26/month bands)
Claiming 100% of mileage on a mixed-use vehicle without apportioning (mileage simplified RATE inherently includes apportionment; only business miles count)
Forgetting that the AMAP rate rises to 55p from April 2026 (employer policies often lag, sole traders also need to update their claim rates)

Worked example

Raj, Birmingham - Self-employed plumber with mixed home-office + van use + regular site visits across the West Midlands (2025/26 + 2026/27 comparison)

Raj runs his sole-trader plumbing business from Birmingham. Works from home ~80 hours/month doing quotes, admin, customer calls. Drives his van 18,000 business miles 2025/26 across site visits + supplier runs (private use: 5,000 miles separately). Van actual costs 2025/26: fuel £4,200; insurance £1,300; service + MOT £900; depreciation (capital allowances if claimed) ~£1,500. Total van actual costs (business proportion 78%): ~£6,170.

Calculation: **WFH simplified expenses calculation:** 80 hours/month → 51-100 hours band → £18/month → **£216/year flat WFH deduction**. **WFH actual cost alternative:** Apportioned utilities + broadband for dedicated home office ~ £45/month × 12 = £540/year. **Actual wins by £324/year for Raj.** **Vehicle mileage (Simplified) 2025/26:** - First 10,000 miles × 45p = £4,500 - Next 8,000 miles × 25p = £2,000 - **Total simplified mileage: £6,500** **Vehicle actual cost alternative 2025/26:** - Total actual costs apportioned 78% business: ~£6,170 - Plus capital allowances if not previously claimed: depends on van purchase year + WDA position - **Approximately £6,170 + capital allowances (if applicable)** **Decision 2025/26: Simplified mileage wins by ~£330 + zero apportionment-defence burden.** **Vehicle mileage 2026/27 (post-April 2026 rate increase to 55p):** - First 10,000 × 55p = £5,500 - Next 8,000 × 25p = £2,000 - **Total simplified mileage 2026/27: £7,500** **Total annual deduction 2026/27 (Simplified mileage + actual WFH):** £7,500 mileage + £540 actual WFH = **£8,040** **Total annual deduction if both simplified (2026/27):** £7,500 mileage + £216 WFH = **£7,716** **Strategic note:** Raj should: (1) elect SIMPLIFIED MILEAGE on the van (locked-in election; benefits from April 2026 rate increase automatically); (2) elect ACTUAL WFH costs (his ~£45/month utility apportionment beats the simplified £18/month for his usage level). Combined approach gives better deduction than full-simplified across both categories. **Lock-in awareness:** Raj's van mileage election is locked for the life of the van. If he buys a new van in 2027/28, he can re-elect (simplified or actual) on that new vehicle separately. Existing van stays on mileage.

Statute reference: Income Tax (Trading and Other Income) Act 2005 + Finance Act 2013 ss.94A-94I. HMRC manual: BIM75001-BIM75080.

Frequently asked questions

What happens if I miss the Self Assessment deadline?+

The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.

Do I need an accountant or can I file Self Assessment myself?+

Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.

How do payments on account work?+

When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.

I work from home 30 hours/month, do I claim £10/month or actual costs?+

Compare both. **Simplified rate**: 25-50 hours/month band → £10/month → £120/year flat WFH deduction. **Actual cost apportionment**: calculate business proportion of home utilities, broadband, council tax (limited), repairs to home-office area. Many sole traders find actual cost gives higher deduction once apportioned by floor area + time use, typically £20-£40/month for a dedicated home office with reasonable utility costs. **Decision**: do the calculation each year (no permanent election). Simplified rates win on simplicity + audit-defence (no apportionment to defend); actual costs win on deduction value if you have a real dedicated home office. The £10-£26/month simplified rates haven't been updated for several years + have lost real-terms value vs accurate apportionment for most sole traders with dedicated office space.

Can I use the £6/week WFH flat rate that employees use?+

No, the £6/week rate is specifically for EMPLOYEES (PAYE) claiming home-working relief via their employer + for LTD CO DIRECTORS claiming it from their own company. Sole traders use the hourly-band flat rate above (£10-£26/month) instead. Important update: the employee £6/week flat rate is being ABOLISHED from 6 April 2026 for new claims, but this does NOT affect sole trader simplified expenses (which continue under ITTOIA 2005 s.94A unchanged). For sole traders the hourly-band simplified expenses remain available 2025/26 + 2026/27.

I switched to actual cost on my car last year, can I switch back to mileage?+

No, once you elect MILEAGE on a specific vehicle, you're LOCKED IN for the entire life of that vehicle in the business. You can't switch back to actual costs for the same vehicle. If you go actual costs first, you can switch TO mileage later, but only at the start of a new vehicle being put into business use. The two-vehicle rule: you CAN use mileage on one vehicle + actual costs on another, but each vehicle's election is locked once made. From April 2026 mileage rates rise to 55p/25p, locking in mileage now (before April 2026) means you get the rate increase automatically when it takes effect.

How does Simplified Expenses interact with the 24-month rule on temporary workplaces?+

Same as AMAP rules for employees. Travel to a TEMPORARY workplace (expected duration <24 months) IS business mileage. Travel to a PERMANENT workplace (expected duration >24 months OR home-to-regular-trading-base) is COMMUTING, not claimable. The Samadian principle (Samadian v HMRC UKUT 0013 TCC, repeatedly cited 2023-2025) confirms that home-to-regular-business-premises journeys are non-deductible even where home is also a place of business, the 'regular and predictable attendance' test applies. Many sole traders with a workshop, studio, or office attended on a fixed weekly schedule mistakenly claim all journeys as business mileage; HMRC's 2024-2025 mileage-claim crackdown specifically targeted this overclaiming pattern.

Last reviewed: 23 May 2026