You can use the ‘simplified expenses’ rules when calculating allowable business expenses. They are associated with the cash basis for accounting but can be used independently by sole traders and partnerships, though not limited companies.
Business costs for vehicles
All you need to do is keep a record of your business miles. You calculate the deduction for business mileage in your car or van at 45p a mile for the first 10,000 miles, and 25p a mile thereafter. For a motorbike, the rate is 24p a mile.
You can ignore the actual costs of buying and running your vehicle in your expenses record. You can pick and choose which vehicles you want to use for the flat rates, but once you have allocated the flat rates, you must continue to apply them for as long as you use that vehicle in your business.
If you have already claimed capital allowances, then you cannot use the flat rates for that vehicle. You can still claim for any other travel expenses (such as train journeys and parking) on top of your vehicle expenses. Keep receipts for fuel purchases if you want to claim back VAT on the fuel element included in the rates.
Working from home
The amount of allowable expenses for working from home can be based on the number of hours you work there each month. The flat rate doesn’t include telephone or internet expenses, so you can claim these by working out the business proportion of the bills. You should always check whether the simplified expenses rules are the right way to go – HMRC provides a basic online tool at www.gov.uk/simplified-expenses-checker and of course we’re here to help.
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