If you’re self-employed, you will be taxed on the profit after claiming business expenses. HMRC allows two approaches: detailed cost calculations or simplified expenses. The latter is especially useful for working from home and vehicle use.

Simplified Expenses for Home Working

If you work from home at least 25 hours per month, HMRC lets you claim flat rate deductions instead of calculating actual household bills:

• 25–50 hours/month: £10 per month
• 51–100 hours/month: £18 per month
• 101+ hours/month: £26 per month

These cover heating, electricity, and other utilities. However, you must calculate business use separately for phone and internet.

Vehicle Expenses

Instead of recording fuel and maintenance costs, you can claim:

• 45p per mile for the first 10,000 business miles
• 25p per mile thereafter
• 24p per mile for motorcycles

This method saves time compared to tracking receipts.

Actual Costs Method
If you prefer, you can calculate the actual proportion of household bills or vehicle expenses used for business. This may be better if your costs are high.

Why It Matters

Using simplified expenses and working from home deductions helps self-employed workers save tax without complicated calculations. Choosing the right method ensures you stay compliant and maximise savings.