A shortcut for sole traders who would rather not split every utility bill — but only worth using when the flat rate beats your real costs.
Working out exactly what share of your electricity bill relates to the spare room you work in — and being able to defend that figure to HMRC — is the kind of admin most sole traders dread. Simplified expenses exist to remove that friction, swapping fiddly apportionment for a flat rate. The trade-off is that simpler is not always cheaper.
There are exactly three areas where HMRC offers a flat-rate shortcut:
Everything else — stock, software, professional fees, travel by train — is still claimed as normal allowable expenses.
Vehicles (per business mile):
| Vehicle | First 10,000 miles | Over 10,000 miles |
|---|---|---|
| Cars and vans | 45p | 25p |
| Motorcycles | 24p | 24p |
Working from home (per month):
| Hours worked from home per month | Flat rate |
|---|---|
| 25 to 50 hours | £10 |
| 51 to 100 hours | £18 |
| 101 hours or more | £26 |
The home-working rate covers heat, light and power but not telephone or internet — you can still claim the business proportion of those separately.
Tom is a self-employed plumber who drives 12,000 business miles in 2025/26.
Simplified method: 10,000 miles x 45p = £4,500, plus 2,000 miles x 25p = £500. Total claim: £5,000.
Actual-cost method: Tom's van costs £2,800 in fuel, £900 insurance, £700 servicing and tyres, and he estimates £1,500 depreciation — £5,900 total. But 20% of his driving is private, so only 80% is allowable: £5,900 x 80% = £4,720.
Here the simplified method wins by £280 and saves Tom the burden of logging every receipt. He still records his business mileage, but not the underlying running costs. Try both approaches with the mileage calculator before you decide.
The flat mileage rate is generous for cheap-to-run cars but can short-change you if you drive an expensive or thirsty vehicle, or rack up very high mileage. Similarly, the home-working flat rate of up to £26 a month (£312 a year) may be well below your real apportioned costs if you run a power-hungry workshop from home. The only way to be sure is to calculate both at least once. A useful rule: low-cost, high-convenience situations favour simplified; high-cost, high-usage situations favour actual.
Simplified expenses trade a little money for a lot of admin — for many sole traders that is a fair deal, but it is worth checking the maths before you commit.
Once you claim the flat mileage rate for a particular vehicle, you must keep using it for that vehicle for as long as you own it — you cannot switch to actual costs midway. You also cannot use simplified vehicle expenses if you have already claimed capital allowances on that vehicle. Limited companies are excluded entirely; their directors instead use the separate Approved Mileage Allowance Payment scheme. Under Making Tax Digital from April 2026, flat rates remain available, but you will report the resulting figures through quarterly digital updates.
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