Simplified expenses for the self-employed

Simplified expenses for the self-employed

The simplified expenses for the self-employed regime is the easier of the two systems that you can use as your own boss to reduce the amount you pay in tax.

You don’t have to use this system but please bear in mind that, compared with using a fully accountant-prepared preparation of claims, the savings you make may be minimal.

These clams can be made by sole traders and business partnerships where there is no limited company as a partner. Simplified expenses can not be used by any other type of company – private limited liability companies, public liability companies, or limited liability partnerships.

You can use the simplified expense system for costs relating to vehicles, costs related to working from home, and costs related to living in your business premises.

This week, we’ll look at simplified expenses – next week, we’ll look at the standard and more complicated expenses claim system.


Simplified expenses for the self-employed – how you claim them

To claim these expenses, you need to add up all of the claims you decide to make from the simplified expenses system and add them to your total expenses in your Self Assessment return form.


Simplified expenses for the self-employed – vehicles

You can claim against the mileage used for business purposes – you can not claim back fuel costs, servicing charges, repair bills, or insurance with the simplified system.

For the first 10,000 miles of travel in your car, you can claim back 45p per mile (a maximum of £450 at this rate). For every additional mile over, the amount is 25p. For motorbikes, the amount is 24p per mile regardless of annual mileage.

Once you have chosen to use the simplified, flat-rate scheme for one vehicle, you must stick with that system for the rest of the year. You can pick and choose which vehicles you claim simplified expenses back on and which you use the standard expense claim system on.

You may be able to claim more under the standard system – please see next week’s article.


Simplified expenses for the self-employed – home expenses

If you use your home as an office either full-time or part-time, you can claim back expenses on a flat rate basis under the simplified expenses rule.

If you work for 24 hours or less at home, unfortunately you can make no claim. For 25 to 50 hours a month, you can claim £10 a month. For 51 to 100 hours, the flat rate is £18 per month and for 101+ hours, the figure is £26.

Telephone and internet expenses can be claimed separately – please see next week’s article.


Simplified expenses for the self-employed – if you live at your business premises

If you run a care home, a guesthouse, a bed and breakfast, or another type of business where you live on the premises, you can use the following flat rates which can be deducted from your profit to lower your tax bills.

If you are the only person on the premises, you can claim £350 a month back. If there are 2 of you, it’s £500, and if there are 3 or more of you, the figure is £650.

You can only deduct the flat rate for the times when someone is living in the premises. For example, if you lived with 2 other people and one of them lived abroad for 6 months, you could only claim for that third person for 6 months of the year.


Simplified expenses for the self-employed – your other expenses

In next week’s articles, we’ll take a look at all the expenses you can claim if you’re self-employed, from clothing expenses to entertaining.


Simplified expenses for the self-employed – want our help?

If you want help to work out whether the simplified, flat-rate scheme is suitable for your business, please call 01202 577 500 or email  for any help and advice you may need.

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