Simplified expenses for the self-employed: mileage rate rises to 55p

The self-employed in Britain do not have to keep every receipt for their car and home office: some costs can be claimed at flat rates. The system is called simplified expenses, and from the 2026/27 tax year the key rate has gone up.

Who can use it

Simplified expenses are open to sole traders and partnerships that have no companies as partners. Limited companies, and partnerships involving one, cannot use them. Whether to use the scheme or claim actual costs is your choice; you can work out both and pick whichever is better.

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Vehicle mileage

Instead of tracking fuel, insurance and repairs, you can claim a flat amount for each business mile. From 6 April 2026 the rates are: 55p a mile for the first 10,000 miles a year (up from 45p), 25p for each mile over 10,000, and 24p a mile for motorcycles. You only need to keep a record of your business journeys.

Working from home

If you work from home at least 25 hours a month, you can claim a flat amount instead of working out a share of your bills: £10 a month for 25-50 hours, £18 for 51-100 hours and £26 for 101 hours or more. This covers heating, electricity and internet for work, but not rent or a business phone, which are claimed separately.

Living at your business premises

The third flat rate is for people who live at their business premises, such as a guesthouse or pub. You deduct a flat amount for your private living costs, based on the number of occupants, and claim the rest as business expenses. The exact figures are on gov.uk.

How to claim

You put the chosen amounts on your annual Self Assessment tax return, filed with HMRC (His Majesty's Revenue and Customs). The online deadline for a tax year is 31 January. You only need simple records: business mileage, hours worked at home and the number of occupants.

When the scheme does not pay

Flat rates are convenient but not always cheaper. If you drive a lot and your real car costs — fuel, insurance, repairs, wear — exceed what the mileage rate gives, claiming actual costs is better. The same goes for a home office: with a large space and high bills, working out a share of your utilities can give more. It is sensible to compare both each year and pick the one that cuts your tax most. Note that for the same car you cannot use the flat rate and actual costs at once — you must choose one.