Tax Glossary

Simplified Expenses

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Last updated on:
March 17, 2024

Simplified expenses are an alternative method for self-employed individuals to calculate some of their business costs, potentially simplifying the tax return process. This option is particularly beneficial for those without significant expenses, individuals who frequently use their vehicle for business, or those who might have difficulty tracking every receipt.

Eligible Expenses for Simplified Calculation

  • Home Office Expenses: Rather than meticulously calculating a percentage of your home expenses (like rent or mortgage interest) for business use, you can opt for the Home Office Allowance. This allowance offers a monthly flat rate ranging from £10 to £26, based on your working hours from home.
  • Vehicle Expenses: For business-related driving, the Mileage Allowance provides a straightforward claim method. You can claim a per-mile rate, varying between 25p and 45p, depending on your vehicle type and the distance driven.
  • Business Premises Residence: If you live on your business premises, such as running a bed and breakfast, you can claim a flat rate between £350 and £650 monthly, depending on the number of family members living with you. It's important to distinguish this from working from home, as it applies when your living space is part of your business operation. Although you also qualify for the Rent-a-Room allowance up to £7,500, you must choose between the two, as both cannot be claimed simultaneously.

Simplified expenses offer an efficient, less cumbersome way to manage your tax obligations, especially when traditional methods of tracking and calculating business expenses might be overwhelming or impractical.

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