Simplified expenses can be used for sole traders or partnerships that have no companies as partners. They are a way of calculating some of your business expenses using flat rates instead of actual business costs. You can decide if actual costs or simplified expenses suits your business.
Types of simplified expenses
You can use flat rates for
- business costs for some vehicles
- working from home
- living in your business premises
Vehicles
Calculate your vehicle expense using a flat rate for mileage. You can use this for cars (except those designed for commercial use, eg taxi’s, driving instructor cars), goods vehicles (for eg vans) and motor cycles.
The flat rate per mile for cars and goods vehicles is 45p for the first 10,000 miles and 25p for every mile over 10,000. For motor cycles the rate is 24p per mile.
Working from home
Calculate the allowable expense based on the number of hours you work from home each month. This does not include telephone and internet costs. You can claim the business proportion of these costs from the actual costs.
- For 25 to 50 hours per month the rate is £10 per month
- For 51 to 100 hours per month the rate is £18 per month
- For 101 and more hours the rate is £26 per month.
Living at your business premises
Some businesses use their business premise as their main home, for example guest houses, bed and breakfast or a small care home. You can use simplified expenses instead of working out the split between what is business cost and private cost use of the premises. You first work out the total expenses for the premises. Then use flat rates to subtract an amount for your personal use based on the number of people living on the premises.
- 1 person – deduct £350 per month
- 2 people – deduct £500 per month
- 3 people+ – deduct £650 per month
For example you and your partner run and live in a guest house and the total business expenses for the year are £15,000. Flat rate = £500 x 12 = £6000. Your claim for business expenses is £15,000 – £6,000 = £9,000.
KPM Accounting 