Do you wish to turn the pain of tax returns and accounting into ease? There is actually an easy and useful way known as simplified expenses for self-employed individuals.

We all can relate to the complications of reporting and bookkeeping when we are self-employed. In order to ensure the good management of small businesses, HMRC has introduced simplified expenses. It is used with a set flat rate and this ends up making the claiming process swift and easier than it ever was.

Furthermore, you can use simplified expenses only when it suits your business requirements. Before we delve further into the discussion, let’s have a look at points of discussion in today’s article.

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Introduction to Simplified Expenses

Simplified expenses allowed the self-employed individuals to make accurate calculations of the allowable business expenses. Also, HMRC has set a flat rate for doing so. We all know that calculations of the exact expenditures in other traditional ways is a complicated process.

This is to further bring to your knowledge that simplified expenses are purely for small businesses and self-employed individuals. The limited companies and business partnership companies are not allowed to use any of them. The list of allowable expenses for self-employed includes the cost in case you happen to live on your business premises, working from home, and the cost involves the vehicle used for business needs.

Simplified expenses can be most suitable for people with straightforward tax affairs. As well as the individuals who carry out small businesses with a few business expenses. Several businessmen happen to travel a lot for their business demands. So, simplified expenses can be useful for such business travellers as well.

Moreover, not everyone who belongs to the business world can get benefit from simplified expenses. In the following, there is a list of who actually can use simplified expenses.

• Business partners with the condition of no partner exist as a company.
• Sole traders

Types Of Expenses

The types of expenses that are allowable under the flat rates include the following:

• Working from home
• If you are living on the business premises
• Vehicle cost that is used for business traveling

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Learn The Way to Use Simplified Expenses

You might be wondering how to use the simplified expenses for your business needs. To make it a seamless working process, be vigilant about the following:

1- Record Keeping: A clear record maintaining for the hours of working from home, use of a vehicle for business travelling, and how people lived at the business premises. This will help to get the most benefit and ease down the processing.

2- Work Out Your Business Expenses: As the tax year ends, you can work out your expenses by using the flat rates for work from home hours, living at business premises, and vehicle mileage.

3- Self Assessment Tax Return: All the above-mentioned amounts should be included in the self-assessment tax returns.

Simplified Expenses for Self-Employed Individuals

You are self-employed and working from home, here is what you are required to do. You need to make accurate calculations for your allowable expenses and use the flat rate. The first need is to calculate the working hours from home every month.

This further means that you are free from calculations of the proportion of business and personal use from the home. Internet and telephone bills are not added to the flat rates. Some other salient features at a glance include the following:

Simplifies expenses are only allowable if your working hours are 25 hours or more in a month from home.

• The flat rate per month is £10 if the hours of business use per month are 25 to 50.
• The flat rate per month is £18 if the hours of business use per month are 51 to 100.
• The flat rate per month is £26 if the hours of business use per month are 101 or more.

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Conclusion

Now that you have developed a better understanding of Simplified Expenses for Self-Employed people, we can sum up the discussion by saying that this process can bring ease to accounting complications only if handled vigilantly. We hope these few minutes of reading will help you to make the right business decisions.

Disclaimer: The information about Simplified Expenses for Self-Employed individuals provided in this article is general in nature and does not intend to disregard any professional advice.