Allowable expenses are the costs of running your business. You take them off your income before HMRC works out your tax. So every cost you claim lowers your bill.
This guide covers sole traders and business partners. It lists what you can claim, what you can’t, and how to claim it. Not sure you need to file at all? Check whether you need to complete Self Assessment first.
Quick Answer
You can claim costs you pay only for your business. That covers office costs, travel, stock, staff, insurance, marketing, training and subscriptions. If something has work and home use, claim only the work share. Personal spending, fines and client entertaining never count.
General guidance only. Your own situation may need specific advice from a qualified accountant.
What Expenses Can You Claim When Self-Employed?
You can claim costs you pay only to run your business. HMRC calls this the “wholly and exclusively” rule. The main groups are office costs, travel, clothing, staff, stock, finance costs, premises, marketing, subscriptions and training. Each cost lowers your taxable profit, so it lowers your tax too.
GOV.UK keeps HMRC’s list of allowable expenses for the self-employed. Every claim has to pass the same test. Did you pay it for the business?
Some costs have a personal side. You can still claim the business share. Say your phone bill is £200 and £70 of it is business calls. You claim £70.
Here’s what a claim is worth. Each £1,000 of expenses saves a basic rate taxpayer about £260. That’s 20% Income Tax plus 6% Class 4 National Insurance. A higher rate taxpayer saves about £420.
Office, Phone and Equipment Costs
These are the everyday running costs:
- stationery, printer ink and postage
- phone, mobile and broadband (business share only)
- software and online tools you use for work
- computers, tools and other equipment
Most sole traders use cash basis. Under it, you claim most equipment as a normal expense in the year you buy it. Cars are different. You claim those through capital allowances instead.
Can You Claim Working From Home Costs?
Yes, if you work from home. You can claim part of your heating, power and broadband. Base it on the rooms you use and the hours you work. Or use HMRC’s flat rate instead. That’s £10 to £26 a month, based on your hours at home.
HMRC’s simplified expenses flat rates work like this:
| Hours of business use at home each month | Flat rate per month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
The flat rate covers power and heating. You can still claim the business share of your phone and broadband on top.
The other route is the real cost. Work out the share of your home used for work and for how long. It takes more effort but can give a bigger claim.
Be careful with a room used only for work. It can affect Capital Gains Tax when you sell your home. Get advice before you claim that way.
What Mileage Can You Claim When Self-Employed?
Use HMRC’s flat mileage rates for business trips in your own vehicle. Cars and vans get 45p a mile for the first 10,000 miles. After that it’s 25p a mile. Motorbikes get 24p a mile. Keep a log of each trip, with the date, the route and the reason.
You can claim mileage or the real running costs. You can’t claim both for the same vehicle. Once you use the flat rate for a vehicle, you keep using it for that vehicle.
Normal commuting doesn’t count. Travel to a fixed place of work is personal. Trips to clients, to a temporary site or to a supplier are business.
You can also claim parking, train fares, bus fares and hotel costs on business trips. Parking fines don’t count.
Staff and Subcontractor Costs
You can claim the full cost of people who work for you:
- staff wages and bonuses
- employer National Insurance
- employer pension contributions
- payments to subcontractors
Your own drawings are not an expense. Money you take out is your profit, and profit is what gets taxed. That’s the same whether you take it weekly or once a year.
Can You Claim Training Costs?
Yes, if the training keeps your current skills up to date. A plumber learning new heating systems can claim. A course to start a new trade can’t be claimed. Neither can the qualification that first let you work in your field. The training must link to the work you do now.
The test is your business today. A web designer on a new design tool course can claim it. The same designer training as a nurse can’t.
Books and online courses follow the same rule. So do conference tickets, if the event is about your work.
Other Costs You Can Claim
These are the other common groups:
Marketing. Website costs, online ads, business cards and trade directories.
Professional fees. Your accountant, a solicitor for business work, and business insurance.
Finance costs. Business bank charges, plus interest on a business loan or overdraft.
Stock. Goods you buy to sell, and materials you use in the job.
Premises. Rent, business rates, heating and lighting for a shop, office or workshop.
Subscriptions. Trade bodies and journals linked to your work.
Clothing. Uniforms and protective gear only. A builder’s hard hat counts. A consultant’s suit doesn’t, even if you only wear it to work.
What Can’t You Claim on Self Assessment?
You can’t claim personal spending or your own drawings. Client entertaining is never allowed. Fines, like speeding or parking tickets, can’t be claimed. Normal clothes don’t count, even if you wear them for work. Nor does the personal share of a cost you also use at home.
The common ones people get wrong:
- your own drawings or a “salary” to yourself
- client meals, drinks and gifts of food or drink
- speeding fines, parking fines and other penalties
- everyday clothes
- the personal share of your phone, car or home
- commuting to a fixed place of work
- your Income Tax and National Insurance
Claiming these can lead to an HMRC check. You pay the tax back, plus interest, and you may face a penalty.
How Are Sole Trader Expenses Different From a Limited Company’s?
The rule is the same, wholly and exclusively for the business. The difference is in who pays you. A sole trader can’t claim a salary. A company can pay its director a salary and employer pension, and both are costs. Sole traders get pension tax relief through their return instead.
A sole trader and their business are the same person in law. So you can’t employ yourself. Anything you take out is profit.
A company is a separate legal person. It can pay you a salary. It can also pay into your pension as an expense. It deducts these costs before Corporation Tax.
Two more differences matter. Companies can’t use cash basis. And company expenses go on the Company Tax Return, not your own return.
Should You Use the £1,000 Trading Allowance Instead?
Only if your real expenses are under £1,000. The trading allowance lets you take £1,000 off your income instead of claiming expenses. You can’t use both in the same year. If your real costs are higher, claim them. Then you pay less tax than with the allowance.
The allowance suits small side income. Think occasional selling or a hobby that earns a little.
If your trading income is £1,000 or less, you don’t need to tell HMRC about it at all. Above that, you register and file.
You can’t claim capital allowances if you use the trading allowance either.
Does Cash Basis Change What You Can Claim?
Mostly it changes when you claim, not what. Cash basis records costs when you pay them. Since April 2024, it’s the standard method for sole traders. You can choose traditional accounting instead. Then you record costs when you take them on, and claim equipment through capital allowances.
Cash basis is simple. Money out of the bank is an expense on the day it leaves.
Traditional accounting matches costs to the work they relate to. It suits businesses with lots of stock or long jobs. You tell HMRC on your return if you choose it.
We explain cash basis accounting and when the other method suits you better.
How Do You Claim Expenses on Your Tax Return?
Add up your costs for the tax year and enter them in the self-employment pages. With turnover under £90,000, you can give one total figure. Above that, you split costs into HMRC’s groups. Keep receipts for at least 5 years after the 31 January deadline.
Keep a record of every cost as it happens. A receipt, an invoice or a bank line with a note. GOV.UK sets out how long to keep your records.
Are you in Making Tax Digital for Income Tax? Then your software sends your costs to HMRC every quarter. You still make a final declaration after the year ends.
With Self Assessment tax return support, someone checks each cost before you file. You claim what you’re owed, and nothing you’ll have to pay back.
Let Us Check Your Expenses
We prepare sole trader returns from your records. We put each cost in the right group, and we spot claims you’ve missed. We also flag anything HMRC is likely to question.
Get a quote and we’ll send you our current pricing. DASA’s Self Assessment service covers your full return.
This article gives general information about allowable expenses for UK sole traders. HMRC set these rates and limits for the 2026 to 2027 tax year. It’s not tax or financial advice. Speak to a qualified accountant about your own situation.
Last reviewed October 2026 by Raqeeb Marzook, ACCA.
Frequently Asked Questions
What expenses can I claim if I’m self-employed?
Costs you pay only for your business, like office costs, travel, stock, staff, insurance, marketing, training and subscriptions. Claim only the business share of mixed-use costs.
What is the mileage rate for the self-employed?
45p a mile for the first 10,000 business miles in a car or van, then 25p. Motorbikes are 24p a mile.
Can I claim working from home costs?
Yes. Claim a share of your real costs, or use HMRC’s flat rate of £10 to £26 a month based on your hours.
Can I use the £1,000 trading allowance and claim expenses?
No. You choose one. Claim real expenses if they’re over £1,000.
How long do I keep receipts?
At least 5 years after the 31 January deadline for that tax year.