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Simplified expenses

Simplified expenses are flat rates that you can use to reduce your self-employment tax bill. They’re great especially if you don’t have big expenses, if you drive a lot, or if you can’t find your receipts.

Which costs can be claimed using simplified expenses:

  • working from home: instead of calculating and claiming a portion of your rent (based on how much of your home is “for business use”), you can also use this “Home Office Allowance”. It’s between £10 and £26 per month, depending on how many hours you spend working from home
  • motor expenses: you can claim between 25p and 45p per mile through this “Mileage Allowance”, depending how much you drive and what kind of vehicle
  • living at your “business premises”: you can claim a flat £350 to £650 per month, depending how many members of your family live there. This isn’t the same thing as “working from home”: the most common situation when you want to claim this flat rate is when you’re renting out a room through a website like Airbnb but also offer breakfast. In this case HMRC will not consider it rental income but self-employment “trading income” from a “running a guest house”. However, you’re also eligible for the £7,500 Rent-a-Room allowance – you can’t claim both, but either is a great tax-free allowance, easy to claim, and often bigger than claiming rental expenses.

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