1. Overview

Expenses are business costs you can deduct from your income to calculate your taxable profit. In practice, this means your allowable expenses reduce your Income Tax.

With simplified expenses you can use flat rates instead of working out your actual business expenses which can require more complex calculations.

Who can use simplified expenses

Simplified expenses can be used by:

  • sole traders
  • business partnerships and limited liability partnerships that have no companies as partners

They can’t be used by:

  • limited companies
  • business partnerships and limited liability partnerships that have 1 or more companies as partners

Types of expenses

You can use flat rates for any or all of these expenses:

  • business costs for vehicles
  • business use of your home
  • private use of business premises as a home

You must calculate all other expenses in the usual way.

Use the simplified expenses checker to find out if the scheme suits your business.

You can start using simplified expenses from the 2013 to 2014 tax year.

You don’t have to use simplified expenses. You can decide if it suits your business.

How to use simplified expenses

  1. Record your business miles for vehicles, hours you work at home and/or how many people live at your business premises over the year.

  2. At the end of the tax year calculate the allowable expenses for vehicles, business use of your home, and private use of business premises.

  3. Include these amounts in the total for your expenses in your Self Assessment tax return.

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