What Expenses Can I Claim as a Sole Trader?

The general rule: "wholly and exclusively"

Before getting into specific categories, it helps to understand the test HMRC actually applies. An expense is allowable if it's wholly and exclusively for the purposes of your business. If something is used for both business and personal purposes, like your phone or your home, you can normally only claim the business proportion, not the full cost.

This single rule underpins almost every decision below, so when you're not sure whether something qualifies, ask yourself whether the cost would exist at all if you weren't running the business.

Expenses you can usually claim

• ✓ Office costs — stationery, phone and internet bills (business proportion), software subscriptions
• ✓ Travel costs — fuel, parking, train and bus fares, hotel stays for business trips
• ✓ Clothing — uniforms and protective clothing needed for your work, not everyday clothing
• ✓ Staff costs — salaries, subcontractor fees, employer's National Insurance, pension contributions
• ✓ Stock and materials — items you buy to sell on, or raw materials used to make your product
• ✓ Financial costs — bank charges, interest on business loans, insurance, accountancy fees
• ✓ Business premises — rent, business rates, utility bills, and running costs for a workspace
• ✓ Marketing — advertising, your website, business cards, and trade subscriptions
• ✓ Training — courses that maintain or update skills you already use in your business

This isn't an exhaustive list, and the exact treatment can depend on your circumstances. HMRC's own guidance on self-employed expenses covers the full detail if you want to check something specific.

Working from home

If you work from home, you've got two options, and you need to pick one for a given cost rather than mixing them:

• ✓ Simplified flat rate — a fixed monthly amount based on the hours you work from home, no receipts needed, set out in HMRC's simplified expenses guidance
• ✓ Actual costs — working out the genuine business proportion of your household bills (heating, electricity, internet, and so on), usually based on the number of rooms used and the hours spent working

The flat rate is simpler and needs no record-keeping, but if your actual household costs are high, working out the real proportion can sometimes be worth more.

Using your own car for business

Most sole traders find it simplest to use HMRC's mileage rates rather than tracking every fuel receipt and running cost individually. HMRC raised these rates for the first time since 2011, effective 6 April 2026:

• ✓ 55p per mile for the first 10,000 business miles in the tax year (cars and vans)
• ✓ 25p per mile for any business miles after that

Ordinary commuting from home to a regular, permanent place of work doesn't count as a business journey. Once you choose the mileage method for a vehicle, you generally need to stick with it for as long as you use that vehicle in the business.

What you can't claim

A few common ones catch people out:

• ✓ Client entertaining — meals, drinks, or events for clients aren't allowable, even though staff entertaining sometimes is
• ✓ Everyday clothing, even if you only wear it for work
• ✓ Fines and penalties, including parking tickets
• ✓ Personal expenses with no genuine business purpose

The £1,000 trading allowance, as an alternative

If your total allowable expenses for the year come to less than £1,000, the trading allowance is often the simpler route: you can deduct a flat £1,000 from your trading income instead of claiming individual expenses, with no records needed for it. If your genuine expenses are higher than £1,000, claiming them individually will usually save you more tax overall, but you have to choose one approach or the other for that income, not a combination of both.

Keep your records regardless

Whichever expenses you claim, HMRC expects you to keep evidence, receipts, invoices, bank statements, for at least five years after the 31 January submission deadline for the relevant tax year. Good record-keeping isn't just about compliance, it's usually the difference between claiming everything you're entitled to and quietly under-claiming out of uncertainty.

How REYS Accountants can help

Getting expenses right is one of the areas where a second pair of eyes pays for itself, both by catching allowable costs people miss and by keeping you on the right side of HMRC's rules. Our Self Assessment service includes reviewing your expenses as part of preparing your return, and if your records need organising first, our bookkeeping service can take that off your plate entirely. Get in touch if you're not sure whether something qualifies.

Frequently Asked Questions