If you are sole trader or partnership business but not company or Limited Liability Partnership (LLP) with corporate partner, you can use fixed rate deductions for certain expense instead of actual cost incurred for ‘wholly and exclusively’ business purpose, to save administration cost.

You can opt in and out of the different possible claims year on year.

Ways of Expenditure on cars claim:

You can claim either of these:

• Claim a business mileage allowance under the fixed rate which is 45p per mile for car or good vehicle up to 10,000 miles and 25p over 10,000 miles or
• Claim actual motoring expenses and capital allowances on cost.

Fixed rate motoring expense deduction

• You can claim a fixed business mileage rate per mile.
• It covers the cost of buying, hiring/leasing, running and maintaining the vehicle, such as fuel, servicing, repairs, insurance  & depreciation etc.
• It doesn’t cover incidental expenses like tolls or parking fees nor finance element for hire purchase or finance lease.
• You need to keep a mileage log of your business journeys.
• You don’t have to use flat rates for all your vehicles.
• Once you have used flat rates for a particular vehicle you must carry on doing so until you change your vehicle.

Shall I do Mileage or Capital allowance claim on car?

If you are regularly changing cars that are used for business and private purposes it may be beneficial NOT to claim fixed rate mileage expenses and claim capital allowances instead. 

How to claim Use of home for business? 

You can claim it with following methods:

• Claim actual expenses (incurred “wholly and exclusively”), or a proportion if mixed use for working at home.
• Claim a fixed rate per month depending on hours worked “wholly and exclusively”.
• Claim actual expenses (incurred “mainly”, but not wholly and exclusively for the purposes of the trade) less the adjustable amount depending on number of occupants.

Flat rate for working from home per month

You can claim flat rate expense based on the number of hours that you work at your home “wholly and exclusively” for the purposes of the trade.

• The flat rate covers for business proportion of household running cost for utilities such as gas and electricity and doesn’t prevent a separate deduction of fixed cost of council tax, insurance and mortgage interest and  telephone, broadband or internet on identifiable business proportion.

Numbers of hours worked at home (per month)      Amount (per month)

     25 to 50                                                                               £10

     51 to 100                                                                             £18

     101 +                                                                                    £26

Alternatively, you can claim Actual basis expenses for working from home

You can claim proportion of expenses for using your home as an office on the actual basis:

• How many home working hours per day
• How many rooms in your house
• Mortgage interest or rent
• Council tax
• Water rates
• Insurance
• Broadband (additional cost due to work)
• Electricity & gas
• Repairs and maintenance
• Cleaning

If you use business premises for private use, you need Flat rate adjustment for private use of business premises

Instead of working out the split between actual private and business use of the premises, you can claim the actual expenses incurred mainly (but not wholly and exclusively) for the purposes of the trade, and deduct a fixed amount depending on number of occupants.

• The starting point is that you incur the expenditure for running and maintaining the premises mainly for the purposes of the trade.
• The expenditure will generally include light and heat, repairs, maintenance, cleaning, food and non-alcoholic drinks.
• The adjustment doesn’t cover Mortgage interest, business rates and council tax. 

The adjustable amounts per month are:

Number of occupants          Adjustable amount

             1                                      £350

             2                                     £500

             3 or more                     £650

A relevant occupant is an individual who occupies the premises as a home or stays at the premises other than in the course of a trade. So lodgers or guests also count.