Tax Glossary

Flat Rate Expenses

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Last updated on:
March 17, 2024

Flat rate expenses offer a simplified way for self-employed individuals and sole traders to claim tax deductions for certain business costs without needing to calculate the actual expenses incurred. These flat rates can cover working from home, business vehicle use, and living at your business premises. Limited companies and partnerships involving a limited company cannot use flat rate expenses.

Key points about flat rate expenses include:

  • Working from Home: A monthly deduction ranging from £10 to £26, based on the hours spent working from home.
  • Business Vehicle Use: A per-mile rate for business travel, varying from 25p to 45p, depending on the vehicle and mileage.
  • Living at Business Premises: A monthly deduction ranging from £350 to £650, based on the number of family members living on the premises.

To claim flat rate expenses, you must include them in your Self-Assessment tax return. It's crucial to keep records throughout the year to support your claim, including business miles for vehicles, hours worked from home, and the number of residents at your business premises.

For accurate tax planning and compliance, ensure your claims are filed by the Self Assessment deadline, which is 31st January following the end of the tax year for which you're claiming. This simplified method can potentially save time and make tax filing more straightforward, but it's essential to evaluate whether it's the most beneficial approach for your specific circumstances.

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