If you are wondering what expenses can I claim as a sole trader, you can generally deduct costs incurred for legitimate business purposes from your business income when calculating taxable profit.
Common allowable expenses include office supplies, business phone costs, advertising, insurance, accountancy services, qualifying travel, stock, equipment, staff costs and certain home-working expenses.
Where something is used for both business and personal purposes, you can normally claim only the identifiable business proportion.
Allowable expenses reduce your taxable profit. They do not normally provide a pound-for-pound refund of everything you spend.
HMRC lists office, travel, clothing, staff, stock, financial, premises, marketing and relevant training costs among the main expense categories available to self-employed people.
| Expense category | Examples that may be allowable |
| Office costs | Stationery, postage, printing, software and business phone use |
| Equipment | Computers, printers, tools and machinery |
| Business premises | Rent, utilities, insurance, security and business rates |
| Working from home | Business proportion of household costs or simplified expenses |
| Vehicles and travel | Business mileage, parking, public transport and qualifying accommodation |
| Stock and materials | Goods for resale, raw materials and direct production costs |
| Staff | Wages, subcontractors, agency fees and employer costs |
| Professional services | Accountancy, legal advice, insurance and bank charges |
| Marketing | Advertising, website costs, mailshots and free samples |
| Training | Courses directly connected to the existing business |
| Clothing | Uniforms and protective clothing required for work |
Key Takeaways:
- A sole trader should claim only genuine business costs and exclude private expenditure.
- Keep invoices, receipts, bank statements, mileage records and evidence explaining the business purpose of each expense. For mixed-use costs such as mobile phones, broadband, cars and household bills, use a reasonable method to calculate the business portion.
- Simplified expenses are available for certain vehicle, home-working and business-premises costs, but they are optional. Compare the flat-rate calculation with your actual costs before deciding which method to use.
- For the 2026/27 tax year, the simplified mileage rate for cars and goods vehicles is 55p per mile for the first 10,000 business miles and 25p for each additional business mile. The 55p rate applies retrospectively from 6 April 2026.
- You cannot normally claim actual expenses or capital allowances when you choose to deduct the £1,000 trading allowance instead.
What Makes an Expense Allowable Under HMRC Rules?
The central question is whether the cost genuinely relates to running your trade or business.
Paying for something from a business bank account does not automatically make it allowable. The nature and purpose of the expense matter more than the account or card used to make the payment.
The Expense Must Relate to Your Business
Examples include buying materials needed to complete customer work, paying for business insurance or subscribing to software used to manage invoices.
Personal living costs are not allowable simply because being self-employed makes them necessary. For example, ordinary meals, childcare and everyday clothing normally remain personal costs.
Mixed Business and Personal Expenses
Some costs have both business and private use. In these cases, you can normally claim only the business element.
Suppose your annual mobile phone bills are £600 and reliable records show that 40% of the use relates to your business. The potential business expense would be £240, not the full £600.
HMRC uses a similar example in which only the business-call portion of a mixed mobile phone bill is deductible.
Keep a note explaining how you calculated the percentage. A reasonable calculation might be based on itemised calls, data usage, business mileage, the number of rooms used or the amount of time an asset is used for work.
Equipment and Capital Allowances
The treatment of equipment can depend on whether you use cash basis or traditional accounting.
Under cash basis, the cost of most equipment kept and used by the business, such as computers or machinery, is generally treated as an ordinary business expense. Cars have separate rules and may require capital allowances unless simplified mileage is used.
Under traditional accounting, equipment, machinery and business vehicles may need to be claimed through capital allowances rather than as ordinary day-to-day expenses.
Full List of Expenses a Sole Trader Can Claim
Office costs, phones and software
Allowable office costs may include:
- Stationery and envelopes
- Postage
- Printing and printer ink
- Business telephone calls
- The business proportion of mobile and internet bills
- Short-term software
- Regular software subscriptions
- Computers, printers and related equipment
HMRC permits phone, internet, postage, printing and qualifying software costs. Equipment treatment depends on the accounting method being used. Non-business use must be excluded.
Business Premises and Running Costs
A sole trader working from commercial premises may be able to claim:
- Rent
- Business and water rates
- Electricity, gas and other utility bills
- Property insurance
- Security costs
- Repairs and maintenance
The purchase of a building, structural work and certain major alterations may be subject to different capital allowance or structures and buildings allowance rules.
What Can a Home-based Sole Trader Claim?
When considering what expenses can I claim as a sole trader working from home, there are normally two approaches: calculating actual business costs or using HMRC’s simplified flat rates.
Actual Household Costs
You may be able to claim a reasonable proportion of:
- Heating and electricity
- Council Tax
- Rent or mortgage interest
- Internet and telephone costs
The calculation should reflect how much of the home is used for business and how often it is used.
For example, dividing a utility bill by the number of rooms may be a starting point, but you may also need to adjust the result if the room is used for business for only part of the week. HMRC requires a reasonable method of separating private and business use.
HMRC Simplified Home-working Expenses
You can use a monthly flat rate when you work from home for at least 25 hours during that month.
| Business hours worked from home each month | Flat-rate expense |
| 25 to 50 hours | £10 |
| 51 to 100 hours | £18 |
| 101 hours or more | £26 |
These rates cover relevant household running costs but do not include telephone or internet expenses. You may calculate and claim the business proportion of phone and internet bills separately.
Cars, Vans, Mileage and Business Travel
You can generally choose between claiming the business portion of actual vehicle running costs and using simplified mileage expenses, provided you meet the relevant conditions.
Actual vehicle expenses may include:
- Fuel
- Insurance
- Repairs and servicing
- Vehicle tax
- Breakdown cover
- Hire charges
Private journeys must be excluded.
For simplified mileage claims in 2026/27, the rates are:
| Vehicle | Simplified rate for 2026/27 |
| Cars and goods vehicles: first 10,000 business miles | 55p per mile |
| Cars and goods vehicles: mileage above 10,000 | 25p per mile |
| Motorcycles | 24p per mile |
The first-tier rate increased from 45p to 55p with retrospective effect from 6 April 2026. If you use the flat rate for a particular vehicle, HMRC says you must continue using it for as long as that vehicle is used in the business.
You cannot use simplified mileage for a vehicle for which you have already claimed capital allowances or treated the purchase price as an expense.
Parking and qualifying public transport costs can be claimed separately from simplified mileage.
Allowable business travel may include train, bus, tram, air and taxi fares, hotel rooms and meals on qualifying overnight business trips. Private travel, fines, penalties and ordinary travel between home and a regular workplace are not allowable.
Stock, Raw Materials and Goods for Resale
Retailers, makers and other product-based businesses may be able to claim:
- Goods purchased for resale
- Raw materials
- Components
- Direct production costs
- Packaging used to supply products
Goods or materials purchased for private use are not allowable. Depreciation recorded in business accounts is also not claimed as an ordinary expense for tax purposes.
Employee and Subcontractor Costs
Allowable staff expenses can include:
- Employee wages and salaries
- Bonuses
- Employer pension contributions
- Employer National Insurance
- Employee benefits
- Agency fees
- Subcontractor payments
- Relevant employee training
Payments to freelancers or subcontractors should be supported by invoices and records describing the work performed.
HMRC does not allow the cost of carers or domestic help, such as a nanny, as a staff expense merely because that help enables the sole trader to work.
A sole trader also cannot deduct their own drawings as wages. Legally, the owner and the sole-trader business are not separate employers and employees.
Accountancy, Legal and Financial Expenses
Business-related professional costs may include:
- Accountancy services
- Business legal advice
- Solicitors, surveyors or architects engaged for business reasons
- Professional indemnity insurance
- Public liability and other business insurance
- Business bank and credit-card charges
- Overdraft interest
- Business-loan interest
- Hire-purchase interest
- Leasing payments
The capital repayment of a loan is not an allowable expense, although qualifying business interest and charges may be.
HMRC also distinguishes general business accountancy work from the cost of preparing and submitting the owner’s Self Assessment tax return. Its guidance states that the cost of preparing and submitting the Self Assessment return is not allowable.
Advertising, Websites and Subscriptions
Marketing expenses may include:
- Newspaper or directory advertising
- Search and social-media advertising
- Mailshots
- Free samples
- Website hosting and maintenance
- Relevant trade journals
- Membership of a trade body or professional organisation connected with the business
Client entertainment, supplier entertainment, event hospitality and most business gifts are not allowable. Gym memberships and political-party payments are also excluded under HMRC’s subscription guidance.
Training and Professional Development
Training can be allowable where it improves or updates knowledge and skills used in the current business. It may also cover technology updates, industry changes and administrative skills that support the existing trade.
A course intended to start an entirely new business or expand into an unrelated industry is normally not allowable as a current business training expense.
Uniforms and Protective Clothing
You may claim the cost of:
- Uniforms
- Protective clothing required for your work
- Costumes used by actors or entertainers
Everyday clothing is not allowable, even when it was bought specifically for work or would not otherwise have been purchased.
What Expenses Can a Sole Trader Not Claim?
Expenses that are normally disallowed include:
- Personal household and living expenses
- The private proportion of mixed-use costs
- Everyday clothing
- Ordinary commuting
- Traffic and parking fines
- Client entertainment and event hospitality
- Most gifts
- Gym memberships
- Personal holidays
- Childcare, carers and domestic help
- Loan capital repayments
- A sole trader’s own drawings
- The cost of preparing and submitting a personal Self Assessment return
- Training for a new and unrelated trade
- Goods purchased for private use
Some costs can be highly fact-specific. A journey that appears to be business travel, for example, may be treated as commuting if it is between your home and a regular, permanent workplace.
Can I Use the £1,000 Trading Allowance Instead?
The trading allowance is a tax exemption of up to £1,000 a year for qualifying trading income.
Where annual gross trading income is £1,000 or less, full relief may mean that the income does not need to be reported to HMRC, although exceptions apply. Records of the income must still be kept.
Where gross trading income exceeds £1,000, partial relief may allow an individual to deduct up to £1,000 instead of deducting actual expenses and other allowances. You cannot use the allowance to create a loss.
| Situation | Option worth examining |
| Actual allowable expenses total £350 | The £1,000 trading allowance may be more beneficial |
| Actual allowable expenses total £1,800 | Claiming actual expenses may produce a larger deduction |
| The business made a loss | Actual expenses may be necessary to calculate and claim the loss |
| The business has significant equipment costs | Actual expenses or capital allowances may be preferable |
This is not always a simple comparison. The trading allowance can also affect loss relief, capital allowances and particular income sources. Check the eligibility restrictions before claiming it.
How Do Sole Trader Expenses Reduce Taxable Profit?
Allowable expenses are deducted from business turnover to calculate profit for tax purposes.
For example:
| Calculation | Amount |
| Annual business turnover | £32,000 |
| Less allowable expenses | £7,000 |
| Business profit before further tax adjustments | £25,000 |
The £7,000 is not refunded in full. Instead, the sole trader’s business profit is reduced from £32,000 to £25,000. Income Tax and relevant National Insurance calculations are then based on the applicable profit figures and the individual’s wider circumstances.
HMRC similarly explains that a business with £40,000 turnover and £10,000 of allowable expenses has £30,000 of taxable profit.
How Do I Claim Sole Trader Expenses?
Record Expenses Throughout the Tax Year
Maintain accurate records of business income and expenses.
Useful evidence includes:
- Receipts
- Supplier invoices
- Sales invoices
- Bank statements
- Mileage logs
- Appointment records
- Notes explaining mixed-use calculations
- Contracts and subscription confirmations
HMRC does not require you to send this evidence with the tax return, but you must retain it in case HMRC asks to check the figures.
Self-employed business records must generally be kept for at least five years after the 31 January submission deadline for the relevant tax year. Different rules can apply to very late returns or records needed for other taxes.
Report Expenses Through Self Assessment
Enter your allowable expense totals in the self-employment section of your Self Assessment tax return.
Depending on the size and circumstances of the business, the return may request a single total or a breakdown across expense categories. Your records must be accurate enough to support the amounts entered.
Check Whether Making Tax Digital Applies
Making Tax Digital for Income Tax became mandatory from 6 April 2026 for qualifying sole traders and landlords whose combined qualifying self-employment and property income exceeded £50,000 in the 2024/25 tax year.
The threshold is scheduled to extend to qualifying income over:
- £30,000 from 6 April 2027
- £20,000 from 6 April 2028
Qualifying income refers to gross self-employment and property income before expenses, not taxable profit. Exemptions may be available in some circumstances, including certain cases of digital exclusion.
People within the first phase must use compatible software to maintain digital records and send quarterly updates. The first standard quarterly-update deadline for 2026/27 is 7 August 2026.
Practical Steps Before Submitting Your Tax Return
Start by separating business and personal transactions. Categorise each cost and identify any expense with mixed use.
Compare actual vehicle and home-working costs with the simplified-expense calculation. You do not have to choose the flat rate simply because it is easier.
Then compare your total allowable expenses with the £1,000 trading allowance. Do not claim both for the same qualifying trading income.
Review equipment purchases to determine whether they should be treated as ordinary expenses or capital allowances. Retain evidence showing the purchase date, amount, business purpose and private-use adjustment.
Finally, confirm whether Making Tax Digital applies to you. Where a cost is unusual, substantial or partly personal, obtain guidance from HMRC or a qualified tax professional before submitting the claim.
Conclusion
The answer to “what expenses can I claim as a sole trader?” depends on the purpose of each cost, the extent of any private use and the accounting method used.
Office supplies, business travel, marketing, stock, equipment, insurance, staff, professional services and qualifying home-working costs may all be allowable. Personal spending, ordinary commuting, everyday clothing, fines and entertainment are normally excluded.
Keep accurate evidence, use a reasonable calculation for mixed-use expenses and compare actual costs with simplified expenses and the trading allowance.
Correctly identifying sole trader allowable expenses can reduce taxable profit while helping you avoid unsupported or duplicated claims.
Frequently Asked Questions
What expenses can I claim as a sole trader working from home?
You may claim a reasonable business portion of costs such as heating, electricity, Council Tax, rent or mortgage interest, telephone and internet use. Alternatively, HMRC’s simplified home-working rates may be used when you work from home for at least 25 hours in a month.
Telephone and internet costs are calculated separately from the flat rate.
Can a sole trader claim their mobile phone bill?
Yes, but only the business portion where the phone is also used privately. Keep itemised bills or another reasonable record supporting the business-use percentage.
Can I claim food and meals as a sole trader?
Ordinary meals are generally personal expenses. HMRC specifically permits meals on qualifying overnight business trips, subject to the wider business-travel rules.
Can I claim clothing that I wear for work?
Uniforms, required protective clothing and performers’ costumes may be allowable. Everyday clothing is not allowable even when it is purchased or worn for work.
Can a sole trader claim mileage and fuel?
You may claim the business proportion of actual vehicle costs or use simplified mileage where eligible. You cannot normally claim simplified mileage and the underlying fuel, insurance, repairs and servicing costs for the same vehicle.
For 2026/27, the simplified rate for cars and goods vehicles is 55p for the first 10,000 business miles and 25p thereafter.
Can I claim a laptop bought before starting my business?
Potentially. Certain qualifying pre-trading revenue expenses incurred within seven years before trading begins can be treated as incurred when the trade starts. Capital expenditure has separate rules, and assets with private use may require an adjustment.
Can I claim accountancy fees as a sole trader?
Business-related accountancy and professional fees may be allowable. HMRC states, however, that the cost of preparing and submitting the sole trader’s Self Assessment tax return is not allowable.
Ask for an itemised invoice where an accountant provides both business-accounting and personal-tax-return services.
Do I need receipts for every sole trader expense?
HMRC requires accurate records and proof of business expenses, but proof can include invoices, bank statements, till rolls and other reliable documents. Keep enough evidence to establish the amount and business purpose of the cost.
Is the £1,000 trading allowance better than claiming expenses?
It may be better when qualifying actual expenses are below £1,000. Claiming actual expenses may be preferable where costs exceed £1,000 or the business needs to establish a tax loss. Eligibility restrictions and the effect on other allowances should also be checked.
This guide provides general UK tax information and does not constitute personalised tax advice. Tax treatment can depend on your circumstances and accounting method.
Source Links
- Expenses if you’re self-employed: https://www.gov.uk/expenses-if-youre-self-employed
- Office, property and equipment expenses: https://www.gov.uk/expenses-if-youre-self-employed/office-property
- Car, van and travel expenses: https://www.gov.uk/expenses-if-youre-self-employed/travel
- Simplified expenses: https://www.gov.uk/simpler-income-tax-simplified-expenses
- Simplified expenses for vehicles: https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles
- Simplified expenses for working from home: https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home
