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Simplified expenses are HMRC flat rates that sole traders and some partnerships can use instead of working out the actual cost of vehicles, working from home and living at business premises. For 2026/27 you can claim 55p a mile for the first 10,000 business miles in a car or van, £10 to £26 a month for working from home, and deduct a fixed amount for private use if you live at your business premises. They save time on record keeping, but they do not always give the biggest deduction.
This guide covers who can use simplified expenses, the 2026/27 rates, the rules that trip people up, and worked examples for self-employed people in Bolton and Greater Manchester. The 2026/27 tax year runs from 6 April 2026 to 5 April 2027.
What are simplified expenses?
Normally, a sole trader claims the business share of real costs. For a van, that means adding up fuel, insurance, repairs, servicing and road tax, then claiming capital allowances on the vehicle itself. For a home office, it means splitting utility bills by rooms and hours.
The flat rates replace those calculations with flat rates in three areas only:
- Business use of cars, goods vehicles (such as vans) and motorcycles.
- Working from home.
- Living at your business premises, such as a guest house or small care home.
Every other cost, such as phone, materials, stock, insurance and accountancy fees, is still claimed at its actual cost. Our guide to expenses you can claim as self-employed explains the full list.
Who can use simplified expenses?
Simplified expenses are open to:
- Sole traders.
- Business partnerships that have no companies as partners.
Limited companies cannot use them, and nor can partnerships with a company as a partner. If you run a limited company, you claim actual costs, or pay yourself a tax-free mileage allowance as an employee of the company.
You can choose to use the flat rates for some areas and not others. For example, you could use the flat mileage rate for your van but claim the actual cost of a home office.
Simplified expenses rates for 2026/27
| Area | Basis | 2026/27 flat rate |
|---|---|---|
| Cars and goods vehicles | First 10,000 business miles | 55p a mile |
| Cars and goods vehicles | Business miles over 10,000 | 25p a mile |
| Motorcycles | All business miles | 24p a mile |
| Working from home | 25 to 50 hours a month | £10 a month |
| Working from home | 51 to 100 hours a month | £18 a month |
| Working from home | 101 hours or more a month | £26 a month |
| Living at business premises | 1 person living there | £350 a month deducted |
| Living at business premises | 2 people | £500 a month deducted |
| Living at business premises | 3 or more people | £650 a month deducted |
The car and van rate for the first 10,000 miles rose from 45p to 55p from 6 April 2026. The 25p rate above 10,000 miles and the 24p motorcycle rate did not change. If your 2025/26 return is still to be filed, remember to use 45p for miles driven before 6 April 2026.
Simplified expenses for vehicles
The flat mileage rate covers the running costs of the vehicle, including fuel, insurance, repairs, servicing and road tax, as well as the cost of buying it. You cannot claim any of these on top. You can still claim parking and other travel costs, such as train fares, separately.
Key rules:
- No capital allowances. You cannot use the flat rate for a vehicle you have already claimed capital allowances on. See our glossary entry on capital allowances for how the alternative works.
- Once you start, you stay. When you use the flat rate for a vehicle, you must keep using it for as long as you use that vehicle in the business.
- Some vehicles are excluded. Cars designed for commercial use, such as black cabs, hackney carriages and dual control driving instructors’ cars, cannot use the flat rate. Taxi drivers claim their actual vehicle costs instead.
- Keep a mileage log. Record the date, journey, purpose and miles for every business trip. Travel between home and a permanent workplace is not business mileage.
You can estimate your claim with our mileage tax calculator, making sure it uses the 2026/27 rate.
Simplified expenses for working from home
If you work from home for at least 25 hours a month, you can claim a flat monthly amount based on the hours you spend on business. The hours count you, and anyone you employ, working at home on the business.
The flat rate replaces the business share of household running costs such as gas and electricity. It does not cover phone or broadband. You can still claim the business share of those by working out the actual cost.
For many people, the flat rate is lower than a careful calculation of actual costs. A sole trader who uses a dedicated room as an office for most of the week may be better off claiming a share of real bills.
Living at your business premises
If you live at the premises you trade from, such as a bed and breakfast, guest house or small care home, you can use a different flat rate. Instead of adding a business amount, you start with all the premises costs, such as utilities, council tax and insurance, and take off a flat amount for private use each month.
If someone only lives there for part of the year, you only deduct the flat rate for the months they were there, using the number of people living there in each month.
Worked example: simplified expenses for a Bolton sole trader
Aisha is a self-employed mobile hairdresser based in Bolton. In 2026/27 she drives 12,500 business miles in her own car and does her bookings, accounts and ordering from home for about 60 hours a month.
| Item | Calculation | Claim |
|---|---|---|
| Mileage, first 10,000 miles | 10,000 × 55p | £5,500 |
| Mileage, remaining 2,500 miles | 2,500 × 25p | £625 |
| Working from home | £18 × 12 months | £216 |
| Total simplified expenses | £6,341 |
As a basic-rate taxpayer paying Class 4 National Insurance at 6%, this deduction saves Aisha about £1,649 in tax and National Insurance for the year (26% of £6,341). She must not also claim fuel, insurance or servicing for the car. She can still claim her phone, products, equipment and parking. Our accountants for hairdressers work with stylists and barbers on exactly these claims.
Example: a guest house in Horwich
Peter and Joan run a small guest house in Horwich and live there all year. Their total premises costs for 2026/27 are £18,000. Two people live there, so they deduct £500 a month for private use, £6,000 for the year. The allowable business expense is £12,000.
Simplified expenses vs actual costs: which is better?
| Simplified expenses | Actual costs | |
|---|---|---|
| Record keeping | Mileage log and hours only | All receipts and bills |
| Vehicle purchase | Included in mileage rate | Claimed through capital allowances |
| Best for | Lower-cost cars, high mileage, small home use | Expensive vans, electric vehicles, dedicated home offices |
| Flexibility | Locked in for the life of the vehicle | Can claim large first-year allowances |
The flat rate tends to work well for an older or cheaper car doing high business mileage. Actual costs often win where you buy a new van, since capital allowances can give a large deduction in the year of purchase. Compare both before you commit, because the vehicle choice cannot be reversed later.
Frequently asked questions
What is the simplified expenses mileage rate for 2026/27?
The rate is 55p a mile for the first 10,000 business miles in a car or van, and 25p a mile after that. Motorcycles are 24p a mile for all business miles.
Can a limited company use simplified expenses?
No. The flat rates are only available to sole traders and partnerships with no companies as partners. Company directors can instead be paid a mileage allowance by their company for business journeys in their own car.
Can I claim simplified expenses and fuel receipts?
No. The flat mileage rate already covers fuel and other running costs, so claiming fuel as well would be double counting. You can still claim parking and other travel such as train fares.
Can I switch from simplified expenses back to actual costs?
For working from home and business premises, you can choose each year. For a vehicle, once you use the flat rate you must keep using it for as long as that vehicle is used in your business.
Do I need to keep records if I use simplified expenses?
Yes. You need a mileage log showing business journeys and a record of the hours you work from home. HMRC can ask to see these, and good records also make Making Tax Digital quarterly updates easier.
Get your expenses right
Flat rates can save time, but the wrong choice can cost you money for years, especially on vehicles. Cangaf’s ACCA-qualified team helps Bolton sole traders compare flat rates with actual costs and file accurate Self Assessment returns. Get a fixed-fee quote today.
Official guidance: Simplified expenses if you’re self-employed, Simplified expenses: vehicles, Simplified expenses: working from home and Simplified expenses: living at your business premises.
