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Could simplified expenses save you time and money?

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Income Tax

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10 September 2026

Flat rates can replace detailed calculations for vehicles, home working and living at business premises. Could simplified expenses save you time and money? We explain the 2026–27 rates, who qualifies and the records you still need to keep.

Could simplified expenses save you time and money?

Self-employed people can use simplified expenses to work out certain business costs. Instead of calculating actual expenses, you apply flat rates set by HMRC. Therefore, the sums become quicker and record keeping becomes simpler.

However, the flat-rate method will not always give you the best tax position. So, it is worth comparing the flat rates with your actual costs first. Could simplified expenses save you time and money? The answer depends entirely on your own figures.

Who can use the scheme

Simplified expenses are available to sole traders and partnerships. Crucially, those partnerships must have no companies as partners. Limited companies cannot use the scheme. Equally, partnerships that involve a limited company are excluded.

You can use flat rates for the following costs:

certain vehicle expenses
working from home
living at your business premises

All other expenses must generally be calculated using the actual costs incurred.

Flat rates for vehicles

For the 2026–27 tax year, cars and goods vehicles attract 55p per business mile. This applies to the first 10,000 business miles. After that, the rate falls to 25p per mile. Meanwhile, motorcycles qualify for a flat 24p per mile.

Working from home and living at business premises

The monthly flat rates for working from home depend on your hours:

£10 for 25 to 50 hours
£18 for 51 to 100 hours
£26 for 101 hours or more

In addition, some businesses operate from premises that double as the owner’s home. In that case, flat rates can account for the private use element. The amount depends on how many people live there.

Keep good records either way

You must still keep records, even when using flat rates. Therefore, track your business mileage carefully. Likewise, log your home-working hours and the number of people living at business premises.

HMRC’s simplified expenses checker can also help. It compares the flat-rate method with claiming actual costs: https://www.gov.uk/simplified-expenses-checker.