The short version: Flat rate expenses (or simplified expenses) let you claim fixed amounts for certain business costs instead of tracking every receipt. It’s a shortcut that works well for some self employed people.
What can you claim flat rates for?
Working from home gets you a set amount per month based on how many hours you work there. Vehicle costs can be claimed per mile rather than tracking fuel, insurance, and repairs separately. If you live at your business premises, there’s a flat rate for that too.
Who can use them?
Sole traders and most partnerships can use simplified expenses. Limited companies can’t. And you can mix and match, using flat rates for some things and actual costs for others.
Is it worth it?
Sometimes yes, sometimes no. If your actual costs are higher than the flat rate, you’re better off claiming the real amount. If your costs are low or you hate keeping receipts, flat rates might suit you.
For vehicles, once you choose a method (flat rate or actual costs), you usually have to stick with it for that vehicle.
How do you claim?
Through your Self Assessment tax return. You still need to keep records of hours worked or miles driven, just not every individual receipt.
Not sure whether flat rates or actual expenses work better for you? We can run the numbers and find out.
