Simplified Expenses for Sole Traders: 2025/26 and 2026/27 Rates
Simplified expenses let you use HMRC flat rates for three kinds of cost instead of working out the real figures. They suit sole traders who drive for work, work from home, or live at their business premises. These are the rates, with GOV.UK's own examples.
Written and reviewed by James Whitfield · Last reviewed 3 November 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
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Simplified expenses are optional flat rates for three costs: business mileage, working from home and living at your business premises.1 Cars and vans are 55p a mile for the first 10,000 business miles in 2026/27 (45p before 6 April 2026, so 45p on your 2025/26 return), then 25p; motorcycles are 24p.2 Working from home is £10, £18 or £26 a month for 25 to 50, 51 to 100 or 101+ hours.3 Living at your premises, you deduct £350, £500 or £650 a month for 1, 2 or 3+ people from the premises costs.4 Every other expense is claimed at its actual cost.1
- →Sole traders and partnerships with no company partners can use them; limited companies cannot.1
- →2025/26 return: 45p a mile for the first 10,000 miles; 2026/27: 55p.2
- →Once you use the mileage rate for a vehicle, you keep using it for as long as that vehicle is in the business.2
- →Home flat rate needs 25+ hours a month at home and excludes phone and internet.3
Related: Travel expenses in detail · Working from home: flat rate or actual costs · All allowable expenses
Employed too, or a company director? Browse all 7 packs in the Tax Pack Library · £9.99
Vehicles: mileage rates
Instead of the actual costs of buying and running a car, van or motorcycle (insurance, repairs, servicing, fuel), you multiply your business miles by a flat rate.2 The car and van rate went up from 6 April 2026, so the year matters.
| Cars and goods vehicles, first 10,000 business miles | 45p (2025/26) · 55p (2026/27) |
| Cars and goods vehicles, after 10,000 miles | 25p both years |
| Motorcycles | 24p both years |
| 11,000 business miles in 2026/27 (GOV.UK example) | £5,500 + £250 = £5,750 |
| The same 11,000 miles driven in 2025/26 | £4,500 + £250 = £4,750 |
You cannot use the flat rate for a vehicle you have already claimed capital allowances on, or included as an expense. You do not have to use it for every vehicle, but once you use it for one you must keep doing so while you use that vehicle for the business. Train fares, other travel and parking are claimed on top.2
Working from home
The flat rate replaces working out the business share of household bills such as heating and electricity. It does not include phone or internet: claim the business part of those at actual cost. You need to work 25 hours or more a month from home to use it.3
| 25 to 50 hours of business use a month | £10 a month |
| 51 to 100 hours | £18 a month |
| 101 hours or more | £26 a month |
| GOV.UK example: 40 hours for 10 months, 60 hours for 2 months | £100 + £36 = £136 |
Living at your business premises
A few businesses are also the owner's home, such as a guesthouse, bed and breakfast or small care home. You add up the total premises costs, then take off a flat amount for private use based on how many people live there, and claim the rest.4
| 1 person living at the premises | £350 a month |
| 2 people | £500 a month |
| 3 or more people | £650 a month |
| GOV.UK example: couple all year, £15,000 premises costs | £15,000 − £6,000 = £9,000 |
| Same, with a child home for 3 months | £15,000 − £6,450 = £8,550 |
Is it worth it?
Flat rates save record-keeping, not always tax. A cheap, efficient car can come out better on the mileage rate; an expensive van with high running costs may be better on actual costs and capital allowances. HMRC's simplified expenses checker compares the two for your figures.1 Whichever you use, keep a log of business miles, hours worked at home, or the people living at the premises.1
Add the flat-rate amounts to your other expenses on the self-employment pages of your return.1 Simplified expenses are separate from the £1,000 trading allowance: if you claim the allowance you cannot deduct expenses as well.5
Frequently asked questions
What is the simplified expenses mileage rate for 2025/26?+
45p a mile for the first 10,000 business miles in a car or van, then 25p. Motorcycles are 24p. The 55p rate applies from 6 April 2026, so it belongs on the 2026/27 return.
What is the working from home flat rate for the self-employed?+
£10 a month for 25 to 50 hours, £18 for 51 to 100 hours and £26 for 101 hours or more. It doesn't cover phone or internet, which you claim at the business share of the actual cost.
Can I use simplified expenses as a limited company?+
No. They are for sole traders and partnerships with no company partners.
Can I switch from the mileage rate to actual costs?+
Not for the same vehicle. Once you use the flat rate for a vehicle you must keep using it as long as you use that vehicle for your business.
Can I use simplified expenses and the trading allowance?+
No. If you claim the £1,000 trading allowance you can't deduct expenses, including simplified expenses. Use whichever gives the bigger deduction.
Sources & references
The rates, thresholds and rules in this guide are drawn from the official HMRC and GOV.UK sources below, using the confirmed 2026/27 figures. Each link opens the relevant official page in a new tab.
- Simplified expenses if you're self-employed www.gov.uk/simpler-income-tax-simplified-expenses
- Simplified expenses if you're self-employed: vehicles www.gov.uk/simpler-income-tax-simplified-expenses/vehicles
- Simplified expenses if you're self-employed: working from home www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
- Simplified expenses if you're self-employed: living at your business premises www.gov.uk/simpler-income-tax-simplified-expenses/living-at-your-business-premises
- Tax-free allowances on property and trading income www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
Estimate your sole trader tax
The sole trader tax calculator turns this guidance into a concrete monthly take-home and tax reserve estimate, based on 2026/27 HMRC rates. Enter taxable profit — not turnover.