Simplified expenses calculator 2026/27: mileage, working from home and living at your premises
Sole trader flat rates for 2026/27: 55p a mile, £10 to £26 a month for working from home. Compare them with your actual costs.
Simplified expenses let a sole trader, or a partnership whose partners are all individuals, use flat rates for three kinds of cost instead of working out the real figure. For 2026/27: 55p a business mile for the first 10,000 miles in a car or van and 25p after that, 24p on a motorcycle; £10 to £26 a month for working from home, depending on hours; and, if you live at your business premises, a flat private-use amount of £350 to £650 a month that is taken off your premises expenses (the rest is your deduction). Whether that beats actual costs depends on your figures: enter both below. (gov.uk simplified expenses)
Enter your figures and press the button.
Who can use simplified expenses
Sole traders, and business partnerships whose partners are all individuals. Limited companies, and partnerships with a partner who is not an individual (such as a company), cannot use them (gov.uk; ITTOIA 2005 s.94C). They are optional, you can use them whether or not you use the cash basis (BIM75005), and you can choose vehicle by vehicle: a flat rate for one vehicle and actual costs for another is allowed. Two choices are all-or-nothing: a partnership that uses the home flat rate for one partner's home must use it for every partner's home (s.94H(5A)), and a business using the premises flat rate for one home-and-business premises must use it for any others (s.94I(6A)). Every other expense is still claimed at its actual cost. The flat-rate totals go into your expenses on your Self Assessment return; see our Self Assessment filing walkthrough.
They cannot be combined with the £1,000 trading allowance, which is taken "instead of deducting any expenses or other allowances" (gov.uk trading allowance). If you are just starting out, our going self-employed checklist covers registering and record-keeping.
Vehicles: the mileage flat rate
| Vehicle | 2026/27 | Before 6 April 2026 |
|---|---|---|
| Cars and goods vehicles, first 10,000 miles | 55p | 45p |
| Cars and goods vehicles, after 10,000 miles | 25p | 25p |
| Motorcycles | 24p | 24p |
The rise from 45p to 55p was made by section 2 of the Taxation (Energy and Vehicles) Act 2026, which changed the employee approved mileage rate and the self-employed simplified rate together, "for the tax year 2026-27 and subsequent tax years". If your accounting year does not end on 5 April, HMRC says to work out the period's profit at the rates for each tax year before apportioning it (BIM75005). The employee side is covered in our mileage allowance guide.
- Which vehicles. Cars, goods vehicles such as vans, and motorcycles. Not cars designed for commercial use, such as black cabs, hackney carriages or dual-control driving instructors' cars (gov.uk vehicles).
- The 10,000-mile band is shared. The higher rate applies to 10,000 miles in total across all your cars and vans on the flat rate, not 10,000 per vehicle (s.94F(3)). Passengers make no difference to the rate.
- What it replaces. All the costs of buying, owning, hiring, leasing and using the vehicle (s.94D(6)): fuel, oil, servicing, repairs, insurance, vehicle excise duty, MOT and depreciation, per BIM75005. Parking, tolls and congestion charges on business journeys are claimed on top, as are other travel costs such as train fares.
- Once chosen, it sticks. If you use the flat rate for a vehicle, you must keep using it for every later period that vehicle is used in the business (s.94D(4)(b)). HMRC says the basis can change only when the vehicle is replaced.
- Vehicles you cannot use it for. Any vehicle you have ever claimed capital allowances on, and a van or motorcycle whose purchase cost you deducted under the cash basis (s.94E).
- Business journeys only. Miles count only for journeys, or identifiable parts of journeys, made wholly and exclusively for the business; HMRC expects a record kept at the time (BIM75005).
Budget 2026: higher rate above 10,000 miles
On 27 October 2026 the government announced, and Budget 2026 on 28 October confirmed, that the simplified mileage rate, and the employee approved rate, for business miles above 10,000 in a car or van will rise from 25p to 35p from 6 April 2027. It is to be made by statutory instrument, so when this page was written it was announced, not law. For 2026/27 the rate above 10,000 miles is 25p. The Budget also said the 55p rate for the first 10,000 miles is permanent. The Budget documents do not mention the motorcycle rate, the working-from-home rates or the business-premises rates (OOTLAR 2.7; Budget 2026). If you drive for a delivery or ride-hailing app, see tax for delivery and taxi drivers.
Working from home: the monthly flat rate
| Business hours in the month | Flat rate a month |
|---|---|
| Under 25 | Nothing |
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
- Which hours count. Hours spent at home wholly and exclusively on work for the business, by you or an employee. If two people work at the same time, each hour counts once. If you have more than one home, they count as one (s.94H(4A), (4B) and (5)). The Act's bands are "25 or more", "51 or more" and "101 or more", so exactly 25 hours qualifies. HMRC reads "work" narrowly: hours "spent wholly and exclusively on core business activities", which it lists as providing goods or services, maintaining business records, and marketing and obtaining new business (BIM75010).
- What it replaces. Your household running costs, so you do not have to work out the business share of bills such as utilities. It does not include phone or internet: claim the business share of those on actual costs (gov.uk working from home). HMRC's manual adds that using the flat rate does not stop you claiming an identifiable business share of fixed costs such as council tax, insurance and mortgage interest (BIM75010).
- Worked example (gov.uk). 40 hours a month for 10 months and 60 hours in 2 months: 10 × £10 + 2 × £18 = £136 for the year. Even at 101 hours every month the most the flat rate gives is £312 a year, so if your business share of actual bills is higher, actual costs give the bigger deduction.
Living at your business premises
For premises used mainly for the business that you also live in, such as a guesthouse, bed and breakfast or small care home. You add up the premises expenses and take off a flat amount for private use, based on how many people live there each month; the rest is your business expense (gov.uk; s.94I).
| People living at the premises | Flat rate a month |
|---|---|
| 1 | £350 |
| 2 | £500 |
| 3 or more | £650 |
- Who counts. Anyone who lives there as a home or stays there other than in the course of the business, in that month (s.94I(6)). HMRC includes non-paying guests and children (BIM75015). Someone who lives there for part of the year counts only for those months.
- What it covers. The private share of household goods and services, rent, utilities, food and non-alcoholic drinks. Mortgage interest, business rates and council tax are outside the flat rate; claim their business proportion separately (BIM75015).
- Worked example (gov.uk). A couple run a B&B with £15,000 of premises expenses. Their child lives there for 3 months of the year: 9 × £500 + 3 × £650 = £6,450 off, leaving £8,550 to claim.
Is the flat rate better than actual costs?
Only your own figures can answer that, which is why the calculator takes both. A few patterns:
- Mileage covers depreciation as well as running costs. At 11,000 business miles a car or van earns £5,750 (10,000 × 55p + 1,000 × 25p). To compare, add the business share of a year's fuel, insurance, servicing, repairs, road tax and MOT to the capital allowances you would get on the vehicle. Because the choice is locked in for that vehicle, compare over the years you expect to keep it, not just one.
- Working from home is capped at £26 a month. What it saves is the work of apportioning bills between home and business.
- Business premises: the flat rate wins when the private use of the premises costs more than the flat amount, and loses when it costs less. If the flat amounts come to more than your expenses, the method gives no deduction.
A deduction reduces the profit you pay Income Tax and Class 4 National Insurance on; it is not cash back. To see the effect on your tax bill, put your profit after expenses into our self-employed tax calculator. For everything else you can claim, see the allowable expenses checklist.
Frequently asked questions
What is the simplified expenses mileage rate for 2026/27?
For a car or van, 55p a mile for the first 10,000 business miles in the period and 25p a mile after that. Motorcycles are 24p a mile. The car and van rate was 45p before the 2026/27 tax year (ITTOIA 2005 s.94F, as amended by the Taxation (Energy and Vehicles) Act 2026).
What is the working from home flat rate for the self-employed?
£10 a month for 25 to 50 hours of business work at home, £18 for 51 to 100 hours and £26 for 101 hours or more. Under 25 hours in a month gets nothing. It does not cover phone or internet, which you claim on actual costs.
Is simplified expenses better than claiming actual costs?
It depends on your figures. The mileage rate covers running costs and depreciation, so compare it with the business share of your actual running costs plus the capital allowances you would get. The home flat rate is at most £26 a month, so high bills with a large business share may do better on actual costs. Work out both before choosing.
Can I switch from the mileage flat rate back to actual costs?
Not for the same vehicle. The law says that once you use the flat rate for a vehicle, it applies for every later period you use that vehicle in your business (ITTOIA s.94D(4)(b)). HMRC guidance (BIM75005) puts it as being able to change basis only when the vehicle is replaced. You also cannot use the flat rate for a vehicle you have claimed capital allowances on.
Can a limited company use simplified expenses?
No. Simplified expenses are for sole traders and for business partnerships whose partners are all individuals. A limited company, or a partnership that has a company as a partner, must claim actual costs.
Can I use simplified expenses and the trading allowance together?
No. The £1,000 trading allowance is deducted instead of your expenses, not as well as them. If your expenses, including flat-rate amounts, come to more than £1,000, claiming expenses usually gives the bigger deduction.