How Sole Traders Can Cut Tax Admin Using HMRC Flat-Rate Expense Claims

Most sole traders I speak with are either over-recording expenses they never fully claim, or under-claiming because the calculation feels too complicated to bother with. Both outcomes cost money. Simplified expenses exist to fix that, and a surprising number of self-employed people have never used them.

HMRC allows sole traders and ordinary business partnerships to use fixed monthly or mileage rates instead of calculating actual expenditure for certain costs, under a method known as simplified expenses. The method covers three categories: working from home, vehicle use, and living on business premises. Each one trades precision for speed, and whether that trade is worth making depends on your specific numbers.

One restriction applies before you go any further. Limited companies cannot use simplified expenses, and neither can business partnerships where one of the partners is a limited company. This method is for sole traders and non-corporate partnerships only, so if you operate through a limited company, these rates do not apply to you.

What the Flat Rates Actually Are for Working from Home and Vehicles

The working from home flat rate covers heat, light, and power. Telephone and internet costs must be calculated separately. The monthly rates are:

• £10 per month for 25 to 50 hours worked from home
• £18 per month for 51 to 100 hours worked from home
• £26 per month for 101 or more hours worked from home

The practical advantage is that you track hours, rather than bills. No splitting utility invoices, no estimating the proportion of your home used for work. The flat rate requires no record-keeping of bills at all for that element of the claim, and for many sole traders running a WordPress or digital services business from home, the time saved on that record-keeping alone justifies the method.

Worth being clear about the ceiling, though. If you heat a dedicated home office and your actual energy costs attributable to business use are higher than £26 per month, the flat rate will produce a smaller claim than a properly evidenced actual cost calculation. The flat rate works in both directions.

For vehicles, the mileage rates under simplified expenses are 45p per mile for the first 10,000 business miles in a tax year, dropping to 25p per mile after that, with motorcycles reimbursed at 24p per mile. These rates cover all running costs for the vehicle, including fuel, insurance, servicing, and depreciation. You claim on business mileage only, which means you need a mileage log, but you do not need to apportion actual costs between personal and business use.

The commitment here matters. Once you choose the mileage method for a vehicle, you must stick with it for as long as that vehicle is used in the business, with no option to switch to actual costs in a later year if the mileage rate stops being favourable. If you have a high-value vehicle with significant running costs, or you drive very high business mileage above 10,000 miles, it is worth calculating both methods before committing.

Living on Business Premises and What Else Sole Traders Can Claim

If you both run and live in your business premises, such as a guesthouse or B&B, the approach runs in reverse. You claim all running costs for the property as a business expense, then deduct a flat monthly amount to reflect your personal use. That deduction is:

• £350 per month for one person living on the premises
• £500 per month for two people
• £650 per month for three or more people

This avoids the need to apportion shared costs like heating, mortgage interest, or council tax between business and personal use, which would otherwise require detailed records and a defensible methodology.

Beyond simplified expenses, sole traders running a WordPress-based business have a separate category of costs worth reviewing. Software, plugins, and hosting used exclusively for business purposes are deductible as business expenses, falling outside the simplified expenses framework entirely because they are direct business costs with no personal use element. If you are paying for a hosting account, a premium plugin licence, or project management software used only for client work, those costs should be on your Self Assessment return in full.

The accumulation of smaller costs is where most sole traders leave money on the table. A £50 plugin licence, a £200 annual hosting plan, a £15 per month SaaS tool: individually they seem minor, but across a full tax year they represent real tax relief that is simply being abandoned, usually because the record-keeping felt burdensome at the time.

Self Assessment filing deadlines do not move. The online return for the 2024 to 2025 tax year is due by 31 January 2026. If you are still working out which expenses you can claim, or whether you are currently using the most appropriate method for your vehicle or home working costs, that deadline is closer than it feels.

I work with sole traders and small business owners who run WordPress-based businesses and want to make sure their site costs, tooling, and infrastructure are properly documented for tax purposes. If you want a clear picture of what your WordPress setup costs should look like on your Self Assessment return, get in touch at The WordPress Guy before your next filing deadline. Bring your current plugin and hosting costs and I can help you confirm what belongs on the return.