Simplified expenses
Flat rates compared
HMRC's simplified expenses and DWP's flat rates for Universal Credit, side by side.
Flat rates let you skip adding up real costs for three things: vehicles, working from home, and living at your business premises. For each one you choose flat rate or actual costs — never both for the same thing.
Vehicles
| Vehicle | HMRC (tax year 2026/27) | Universal Credit (each month) |
|---|---|---|
| Car or van | 55p a mile for the first 10,000 business miles in the tax year, then 25p | 45p a mile for the first 833 miles in the month, then 25p |
| Motorcycle | 24p a mile | 24p a mile (motorbikes and scooters) |
- HMRC: once you use the flat rate for a vehicle, you keep using it for as long as that vehicle is in the business. You can't use it for a vehicle you've claimed capital allowances on. Parking and other travel can be added on top.
- UC: an ordinary (non-adapted) car must use the flat rate. The flat rate covers all running costs, including the car wash. See #7 Vehicles and mileage.
Working from home
| Hours worked at home in the month | HMRC | Universal Credit |
|---|---|---|
| 25 to 50 | £10 | £10 |
| 51 to 100 | £18 | £18 |
| 101 or more | £26 | £26 |
- Under 25 hours a month, neither allows the flat rate — use actual costs.
- HMRC: the flat rate doesn't cover phone or internet; claim the business share separately.
- UC: only some activities count as working from home. See #4 Working from home.
Living at your business premises
| People living there | HMRC: take off each month | Universal Credit: take off each month |
|---|---|---|
| 1 | £350/month | £350 |
| 2 | £500/month | £500 |
| 3 or more | £650/month | £650 |
Who can use HMRC's flat rates: sole traders and partnerships with no company partners — not limited companies. Sources: HMRC — Simplified expenses · DWP — Business expenses you can report to UC. Last checked: 10 November 2026.