Small Business Tax Dictionary
Simplified Expenses
Simplified Expenses is a system in the United Kingdom that allows small businesses and self-employed individuals to calculate certain business expenses using flat rates, rather than working out actual costs.
What does Simplified Expenses cover?
The scheme covers three main areas:
Vehicle expenses — Instead of calculating actual fuel and running costs, you can use a flat rate per mile:
- 45p per mile for the first 10,000 business miles per year (cars and goods vehicles)
- 25p per mile thereafter
- 24p per mile for motorcycles
Home office costs — Instead of calculating the exact business proportion of your home running costs, you can use a monthly flat rate based on hours worked from home:
- 25–50 hours per month: £10/month
- 51–100 hours per month: £18/month
- 101+ hours per month: £26/month
Living accommodation provided to employees — A flat rate based on the number of employees living in the accommodation.
Who can use Simplified Expenses?
Simplified Expenses is available to:
- Sole traders
- Business partnerships (that don't include companies as partners)
Limited companies cannot use Simplified Expenses — they must use actual costs.
Why choose Simplified Expenses?
The system aims to make record-keeping and tax reporting easier, reduce administrative burdens, save time, and improve financial accuracy while supporting compliance with UK tax regulations. It is particularly useful for businesses without complex expenses or detailed mileage logs.