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Simplified Expenses If You Are Self-Employed

Written by Jon Cooper

In order to make the administration easier if you are self-employed, the HMRC are permitting you to use an allowance for the business costs of vehicles and for working from home.

This is an option and, if it is more beneficial to use the actual costs, this is still fine.

For all other business expenses, the actual costs incurred still need to be recorded.

For the business costs of vehicles allowance, record the business miles driven in your vehicle during the tax year. A vehicle can be a can, van or motorcycle. Then at the end of the year apply the applicable rate below:

Vehicle Type

Rate pence per business mile

First 10,000 miles Over 10,000 miles
Cars 45p 25p
Goods Vehicles 45p 25p
Motorbike 24p 24p


For example, you have used your car for 12,500 business miles in the year. You would claim:

Business Miles Rate Total
10,000 £0.45 £4,500.00
2,500 £0.25 £625.00
Total £5,125.00


This flat rate allowance is instead of all the actual costs of buying and running your vehicle including insurance, repairs, servicing and fuel.

As a result, you are unable to use the flat rate if you have already claimed capital allowances the vehicle.

If you have more than one vehicle, you can choose whether to use the flat rate allowance on a case-by-case basis. However, once you use the flat rate for a vehicle, you must continue to do so for as long as the vehicle is used in the business.

The actual costs of all other business travel expenses, such as train and air fares, and parking costs should still be claimed.

For the working from home allowance, record the number of hours you work at home each month. If these total 25 hours or more, then at the end of the year apply the applicable rate below:

Rate per month
25 to 50 hours £10.00
50 to 100 hours £18.00
101 or more hours £26.00


For example, you worked from home for over 100 hours in most months but only 60 in two particular months. As a result, you would claim:

No. of Months Rate Total
10 £26.00 £260.00
2 £18.00 £36.00
Total £296.00


This flat rate allowance is instead of calculating the proportion of personal and business use of your home and applying this to the actual costs.

However, the allowance does not include telephone or internet expenses that still need to be based on the actual costs incurred.

If you would like any further information, please contact us at welcome@cooperfaure.co.uk.

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