Simplified Expenses

Running a Vehicle

Instead of claiming the actual costs of the vehicle – which would be the purchase price, insurance, repairs, road tax, etc – you can instead claim a flat rate based on your business mileage. Once you start to use flat rates for a vehicle you must continue to do so for the life of that vehicle – you cannot then switch to actual expenses. And similarly, when you first buy a vehicle if you claim the cost of it as an expense you cannot then switch to flat rates. So you need to decide when you buy it what you are going to do. Note that simplified expenses cannot be used for cars designed for commercial use.

Working at Home

If you work from home for 25 hours or more a month you can claim a flat rate instead of the actual costs of utility bills. Note that this does not include telephone & internet costs – you can still claim actual expenses for these on top. The amount you would claim would depend upon the hours worked at home for that particular month.

Living at your Business Premises

If your business premises is also your home then you can use a flat rate to work out the personal use element of the expenses for the premises. You would then deduct the personal use element from your business premises expenses. The flat rate is based on the number of people living there.

Current rates for simplied expenses are available at HMRC. There is also a simplified expenses checker which works out whether it’s more beneficial to claim actual costs or flat rates.

To summarise simplified expenses are calculated using flat rates and the records you have kept to track business mileage, working at home hours or household size. These would then be used along with your other income and expenses to calculate your profit and loss for the year.

Simplified Expenses
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