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HMRC internal manual

Business Income Manual

HM Revenue & Customs
, see all updates

Simplified expenses: introduction

Chapter 5A ITTOIA 2005

The Government has introduced simpler rules for some business expenses which can be used from April 2013 onwards. The rules allow businesses to calculate these expenses using flat rate allowances or adjustments rather than apportioning actual expenditure.

The simplified expenses rules can be adopted by all sole traders and business partnerships (excluding those with a corporate partner), whether they also use the cash basis or not, and are entirely optional. Limited companies and partnerships with one or more corporate partners cannot use the rules.

There is no business income limit to using simplified expenses.

The categories covered by the new simplified expenses rules are:

  • Expenditure on motor vehicles (BIM75005)
  • Use of home for business purposes (BIM75010)
  • Private use of business premises (BIM75015)