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What Expenses Can I Claim as a Sole Trader UK

If you’re self-employed in the UK, claiming the right business expenses is one of the simplest ways to reduce your tax bill. This guide covers every major category of allowable expenses for sole traders, explains what HMRC will and won’t accept, and gives you practical tips to keep your records clean. Whether you’re a freelancer, a construction worker, or running an e-commerce business, the same core rules apply.

What counts as an allowable expense

HMRC allows you to deduct expenses that are incurred “wholly and exclusively” for your business. That phrase is the foundation of every claim you make. If a cost is partly personal and partly business, you can only deduct the business portion.

Allowable expenses reduce your taxable profit. So if you earn £60,000 and have £15,000 of legitimate expenses, you only pay tax on £45,000. In 2026/27, the first £12,570 is covered by the personal allowance, so you’d pay 20% income tax on the remaining £32,430 — plus Class 4 National Insurance. Getting your expenses right genuinely matters.

Office and admin costs

These are the day-to-day running costs of your business, and most of them are straightforward to claim.

  • Office rent and business rates (if you rent a separate workspace)
  • Stationery, postage, and printing
  • Phone and broadband — the business proportion only if the line is also used personally
  • Software subscriptions used for your business (accounting software, project management tools, design apps)
  • Computer equipment — see the capital allowances note below
  • Cleaning costs for your business premises

If you buy equipment that you expect to last more than a year — a laptop, a camera, a desk — HMRC generally treats it as a capital item rather than a day-to-day expense. You claim it through the Annual Investment Allowance (AIA), which lets you deduct the full cost in the year of purchase. Check the latest HMRC guidance for the current AIA limit, as it has changed several times in recent years.

Travel and vehicle expenses

You can claim the cost of travel that is entirely for business purposes. Commuting from home to a regular, permanent workplace is not allowable — that rule applies to sole traders just as it does to employees.

Using your own car or van

You have two options. The first is the simplified mileage rate. In 2026/27, HMRC’s approved mileage rate for cars is 55p per mile for the first 10,000 business miles, and 25p per mile after that. For motorcycles it is 24p per mile. Check the latest HMRC guidance for the current van and bicycle rates. This flat rate covers fuel, insurance, servicing, and depreciation — you cannot then also claim those costs separately.

The second option is to claim the actual costs — fuel, insurance, servicing, MOT, road tax — and apportion them between business and private use based on your mileage log. Most sole traders with modest business mileage find the flat rate simpler.

Other travel costs

  • Train, bus, and taxi fares for business trips
  • Overnight accommodation when staying away for business
  • Subsistence (meals) when you are travelling on business and away from your normal base — HMRC has approved benchmark rates; check the latest HMRC guidance for current figures
  • Parking fees and road tolls incurred on business journeys

Keep receipts and a mileage log. HMRC can and does ask for evidence, and “I think it was about 10,000 miles” will not be enough if you are investigated.

Stock, materials, and equipment

If you buy goods to resell, those stock costs are a legitimate expense. So are materials you use to complete a job — timber for a carpenter, fabric for a dressmaker, ingredients for a caterer.

Be careful with unsold stock at the year end. HMRC requires you to include the value of stock on hand when calculating your profit. You cannot simply claim everything you bought, regardless of whether it was sold or used.

Small tools and equipment that have a short working life — a drill bit, a paintbrush — can usually be expensed directly rather than treated as capital assets.

Staff and subcontractor costs

If you employ staff, the following costs are allowable:

  • Gross wages and salaries
  • Employer’s National Insurance contributions — in 2026/27 the employer NI rate is 15% on earnings above £5,000 per employee per year
  • Pension contributions you make as employer
  • Recruitment costs
  • Staff training costs (where the training is relevant to the current business)

If you pay subcontractors, those payments are deductible too. If you work in the construction industry, be aware that CIS returns and the Construction Industry Scheme deduction rules affect how you record and report these payments.

Note: you cannot include your own wages as an expense. As a sole trader, your profit after expenses is your income — there is no such thing as paying yourself a salary that reduces your tax bill. That is one reason some businesses choose to incorporate.

Marketing and advertising

Any money you spend promoting your business to customers is allowable. This covers:

  • Website design and hosting
  • Paid advertising — Google Ads, Facebook Ads, sponsored posts
  • Printed flyers, business cards, and signage
  • Sponsorship, if there is a genuine commercial reason
  • PR and copywriting fees

Entertaining clients is not allowable, even if the purpose is to win new business. HMRC is clear on this: client entertainment is a private benefit and cannot be deducted. Staff entertaining up to a certain limit is treated differently — check the latest HMRC guidance for the current threshold.

Professional fees and subscriptions

Fees you pay for professional services related to your business are deductible. This includes:

  • Accountant and bookkeeper fees — including the cost of having your self assessment return prepared
  • Solicitor fees for business contracts or debt recovery
  • Architect or surveyor fees for a business property
  • Professional indemnity insurance and public liability insurance
  • Trade association and professional body membership fees, where membership is relevant to your work

Subscriptions to trade journals and relevant publications are also allowable. A subscription to a general interest magazine is not.

Financial costs

You can claim the interest on any loan taken out entirely for business purposes. If a loan is partly personal and partly business, only the business portion of the interest qualifies.

Bank charges on a business account are deductible. Credit card charges on a card used solely for business are also allowable. Hire purchase and leasing costs can usually be claimed — the treatment depends on whether it is a finance lease or an operating lease, so take advice if you are unsure.

Bad debts — money owed to you that you have genuinely written off because it is irrecoverable — can be deducted in the year you write them off.

Working from home

If you work from home, you can claim a proportion of your household costs. There are two ways to do this.

Flat rate (simplified expenses)

HMRC publishes flat rate amounts based on the number of hours you work from home each month. This is the easiest route for most sole traders. Check the latest HMRC guidance for the current monthly flat rate figures, as these are updated periodically.

Actual costs method

Alternatively, you calculate the business proportion of your actual household bills — mortgage interest or rent, gas, electricity, broadband, and council tax. You work out what fraction of your home is used for business, and what proportion of the time. The calculation needs to be defensible if HMRC asks. Be cautious: if you claim a room is used exclusively for business, that can affect the capital gains tax position when you sell your home.

Training and professional development

Training costs are allowable where the training updates or improves skills you already use in your current business. A plumber attending a course on new boiler technology — allowable. The same plumber doing a course to become a financial adviser — not allowable, because it is setting up a new trade rather than supporting the existing one.

This distinction trips people up. The test is whether the training relates to your existing self-employed trade, not whether it might eventually benefit the business in some abstract way.

What you cannot claim

Just as important as knowing what you can claim is knowing what HMRC will reject.

  • Your own wages or drawings — as explained above, these are not expenses for a sole trader
  • Personal clothing — even if you only wear it for work, ordinary clothing is not allowable. Protective clothing and uniforms with a logo are different
  • Client entertainment and hospitality
  • Fines and penalties — parking fines, HMRC late filing penalties, and similar costs are not deductible
  • Personal purchases that happen to be made on a business account
  • Capital repayments on a loan — only the interest qualifies, not the capital element
  • Costs with a dual purpose that cannot be separated — if something is both personal and business and cannot be split, you generally cannot claim any of it

Keeping your records straight

You must keep records of all your income and expenses. HMRC requires sole traders to keep records for at least five years after the 31 January submission deadline for the relevant tax year. That means your 2024/25 records need to be kept until at least 31 January 2031.

Good bookkeeping makes your self assessment return faster, reduces your accountant’s fees, and means you can defend every figure if HMRC opens an enquiry. Use accounting software or a simple spreadsheet — what matters is that it is accurate and up to date.

From April 2026, sole traders and landlords with income over £50,000 will need to comply with Making Tax Digital for Income Tax. This means submitting quarterly updates to HMRC digitally. Getting your records into software now is sensible preparation. If you are unsure where to start, Xero training can help you get up and running quickly.

If you are also registered for VAT — which becomes compulsory once your taxable turnover exceeds £90,000 in a rolling 12-month period in 2026/27 — your expense records also feed into your VAT returns, so accuracy matters twice over.

Knowing what you can claim is only half the job. Claiming correctly — with the right records, at the right time, through the right return — is what keeps you on the right side of HMRC while keeping your tax bill as low as the law allows.

Frequently asked questions

Can I claim my mobile phone as a sole trader?

Yes, but only the business proportion. If you use your mobile 60% for business and 40% personally, you can claim 60% of the bill. If you have a separate phone used exclusively for business, you can claim 100% of the cost.

Can I claim food and drink as a business expense?

Only when you are travelling away from your normal business base on a business trip. Your regular lunch near the office or at home is not allowable. Client meals and entertainment are also not deductible, regardless of the business purpose.

Can I claim my car if I use it for both business and personal travel?

Yes. Either use HMRC’s approved mileage rate (55p per mile for the first 10,000 business miles in 2026/27) and claim only for business miles, or claim actual motoring costs apportioned to business use. Keep a mileage log either way.

Do I need receipts for every expense I claim?

HMRC expects you to hold evidence for every claim. Receipts, invoices, bank statements, and mileage logs all count as evidence. If you cannot produce evidence during an enquiry, HMRC can disallow the expense and charge penalties on top of the tax owed.

Can I claim expenses before my business officially started?

Yes, within limits. Pre-trading expenses incurred in the seven years before you started trading can be claimed, provided they would have been allowable if incurred after you started. This covers things like equipment bought before launch, or professional advice taken while setting up.

What is the difference between an expense and a capital allowance?

An expense is a cost you write off entirely in the year it is incurred — stationery, software subscriptions, fuel. A capital item is something that will last and generate value beyond the current year, such as a van or machinery. Capital items are claimed through capital allowances — most commonly the Annual Investment Allowance — rather than as a direct expense. Check the latest HMRC guidance for the current AIA limit.