Simplified Expenses and Mileage for the Self-Employed
How HMRC's simplified expenses work — flat rates for vehicle mileage, working from home and living on business premises — when they beat working out actual costs, and how they fit with MTD.
The short answer
Simplified expenses let you claim flat rates instead of working out actual costs: 55p per mile for the first 10,000 business miles by car or van (25p after that) from 2026/27, a monthly flat rate for working from home based on hours, and a flat deduction if you live at your business premises. They're optional — use them where they're simpler or give a better result than actual costs.
HMRC's simplified expenses exist to save you time. Instead of totting up every actual cost, you claim a flat rate. Here's how they work and when to use them.
Vehicle mileage
The most-used simplified expense. You claim a flat rate per business mile that covers all running costs for that vehicle — fuel, insurance, servicing, depreciation:
| Vehicle | Rate (2026/27) |
|---|---|
| Cars & vans (first 10,000 miles) | 55p per mile |
| Cars & vans (over 10,000 miles) | 25p per mile |
| Motorcycles | 24p per mile |
| Bicycles | 20p per mile |
New for 2026/27: the car and van rate rose from 45p to 55p per mile for the first 10,000 miles from 6 April 2026 — the first increase since 2011. The 25p rate above 10,000 miles is unchanged.
Keep a mileage log (date, journey, purpose, miles). You can't also claim that vehicle's actual running costs — it's one or the other per vehicle. If you carry a colleague on a business trip you can add 5p per mile per passenger.
Working from home
Rather than apportioning your household bills, claim a flat monthly amount based on hours worked from home:
| Hours worked from home per month | Flat rate |
|---|---|
| 25–50 | lower band |
| 51–100 | middle band |
| 101+ | higher band |
If your genuine business share of bills is higher than the flat rate, working out actual costs may save more — compare the two.
Living at your business premises
If you live at your business (for example, a guesthouse), you can use a flat rate to account for private use of the premises, deducting a set amount based on how many people live there, rather than splitting every bill.
When simplified expenses win
- You do lots of business miles and don't want to track every fuel receipt.
- Your home working is modest and apportioning bills isn't worth the effort.
- You value simplicity and fewer records over squeezing the last pound.
When they don't: if your actual costs are clearly higher, do the real calculation — simplified is optional, not compulsory.
Fitting it into MTD
Simplified expenses work fine under Making Tax Digital. You still keep the underlying digital record (your mileage log), and the resulting flat-rate figure goes into your cumulative quarterly update like any other expense.
Key takeaways
- Mileage: 55p/mile (first 10,000), then 25p from 2026/27 — covers all vehicle running costs.
- Home working and living on premises have optional flat rates too.
- Simplified is optional — use actual costs where they're clearly higher.
- Keep the underlying logs so your MTD records stand up to scrutiny.
This article is general information, not tax advice. Check current rates and rules at gov.uk or speak to your accountant.
Frequently asked questions
What are the mileage rates?
For cars and vans, 55p per mile for the first 10,000 business miles in the tax year and 25p per mile after that. For motorcycles it's 24p per mile. These simplified rates cover fuel, servicing, insurance and depreciation, so you don't claim those separately for that vehicle.
Can I switch between simplified and actual costs?
You choose per vehicle and generally stick with your choice for that vehicle. You can't claim the flat mileage rate and the actual running costs for the same car. Keep a mileage log either way.
How does the working-from-home flat rate work?
It's a set monthly amount based on how many hours a month you work from home (25+ hours, 51+ hours, 101+ hours bands). It saves you apportioning actual bills, but if your real business share is higher, actual costs may be better.
Do simplified expenses work with MTD?
Yes. You still record the underlying activity (like your business mileage) digitally, and enter the resulting flat-rate figure into your quarterly update the same way as any other expense.
Related reading
Allowable Expenses for the Self-Employed: A Plain Guide
What counts as an allowable business expense when you're self-employed — the main categories HMRC accepts, what's disallowed, the 'wholly and exclusively' test, and how expenses feed your MTD quarterly updates.
Self-Employed Tax Deductions Checklist (Don't Miss These)
A checklist of commonly missed tax deductions for the self-employed — from home office and mileage to professional subscriptions, bank charges and pension contributions — so you don't pay more tax than you owe.
MTD for Income Tax Explained for Sole Traders (2026 Guide)
A plain-English guide to Making Tax Digital for Income Tax for sole traders — who's affected, what changes, what you have to do each quarter, and how to get ready before April 2026.