HMRC Simplified Expenses: A Self-Employed Guide to Flat-Rate Allowances

Chrissy Leach • 12 January 2026

Save time, stay compliant, and make your record-keeping easier.

If you’re self-employed, you already have enough to think about without getting lost in piles of receipts and complex calculations. That’s where HMRC’s Simplified Expenses come in; a set of flat-rate allowances designed to make claiming certain business costs quicker and easier.

But what exactly are simplified expenses, and are they the right choice for you? Let’s break it down.

What are Simplified Expenses?

Simplified expenses are flat rates set by HMRC that you can use instead of working out the exact cost of some common business expenses.

They’re for sole traders and partnerships, not limited companies.

You can use them for things like:

Business use of your home
Business mileage
Living at your business premises (for example, if you run a guest house or bed and breakfast)

Using the flat rates means you don’t need to record every exact bill or split personal and business costs manually; HMRC’s set figures do the work for you.

Business Use of Your Home

If you work from home, HMRC lets you claim a monthly flat rate based on the number of hours you work there each month:

25-50 hours worked - £10 claim
51-100 hours worked - £18 claim
101+ hours worked - £26 claim

You can claim different amounts for each month if you work different hours each month, and it can include diary planning and doing your bookkeeping.

This is instead of working out the exact costs and what proportion to claim.

You can also still claim separate costs for things like phone and internet if used for business.

Business Mileage (Cars, Vans, Motorcycles)

Instead of tracking every cost for fuel, insurance, and servicing, you can use HMRC’s approved mileage rates:

Cars and vans - 45p per mile for the first 10,000 miles, then 25p after

Motorcycles - 24p per mile

You just need to record your business miles, no receipts required for petrol or repairs.

This is instead of working out the exact costs and claiming the business proportion.

Note that once you've made a decision to claim mileage or actual costs, you must continue for that vehicle.

Living at Your Business Premises

If you live where you work - for example, you run a small B&B - you can use simplified expenses to adjust for personal use.

You’ll calculate your actual business costs (such as utilities, council tax, etc.) and then subtract a fixed amount for your personal use, depending on how many people live there:

1 person - £350 per month

2 people - £500 per month

3 or more people - £650 per month

Should You Use Simplified Expenses?

Simplified expenses can make your bookkeeping much easier, but they’re not always the most tax-efficient option.

✅ They’re great if you want to:

Save time on record-keeping
Keep your accounts simple
Have low or average running costs

⚠️ But they might not be right if:

You have high actual expenses
You want to claim the exact cost of bills or travel
You need precise figures for business analysis or funding applications

We recommend trying both methods for a short period; track your actual costs for a month or two, then compare them to the flat rates. You’ll quickly see which gives you the better result.

If you’re unsure, we can review your figures and help you choose the most efficient option for your next tax return.

Need help simplifying your taxes?

If you’re self-employed and not sure what you can claim, we can make it clear.

Get in touch with CJL Accountancy today, we’ll help you make sense of your numbers so you can focus on your business.

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