What Business Expenses Can I Claim as a Sole Trader?

Running your own business comes with costs, but many of those costs can be deducted when working out your taxable profit.

These are known as allowable expenses. Claiming the expenses you’re entitled to can reduce the amount of profit on which you pay Income Tax.

However, not everything you spend money on through your business is automatically allowable. Some expenses cannot be claimed at all, while others may need to be restricted if there is also a personal element.

This guide explains some of the most common expenses sole traders can claim and highlights some of the areas where it is easy to get caught out.

Important: This guide is aimed at sole traders. Different rules can apply to expenses paid by a limited company.

Running a limited company instead? The rules are different because the company is a separate legal entity. Read our guide to what expenses you can claim through a limited company.

What makes a business expense allowable?

As a general principle, an expense needs to relate to your business rather than being a personal cost.

Where something is used for both business and personal purposes, you may still be able to claim the identifiable business proportion.

For example, if your mobile phone costs £600 over the year and 60% of its use relates to your business, you may be able to claim £360 rather than the full £600.

Keeping good records is therefore important, particularly where an expense has mixed business and personal use.

Office costs, software and equipment

Common office and administrative expenses can include:

• Stationery and printing
• Postage
• Telephone and internet costs
• Software subscriptions
• Accountancy or bookkeeping software
• Office rent
• Business rates
• Utilities for business premises
• Business insurance

The treatment of larger items of equipment, such as computers, machinery and furniture, can depend on how your accounts are prepared.

Under the cash basis, most equipment purchased and kept for use in the business can generally be deducted as an allowable expense, although there are exceptions, particularly cars. Under traditional accounting, qualifying equipment may instead receive tax relief through capital allowances.

So if you’ve bought a significant asset for the business, don’t assume it should simply be treated in the same way as stationery or a monthly software subscription.

Can I claim for working from home?

If you work from home, you may be able to claim a proportion of household costs such as:

• Heating
• Electricity
• Council Tax
• Rent or mortgage interest
• Internet and telephone costs

If you’re claiming actual costs, you need to use a reasonable method of separating the business element from your personal use. This might take account of factors such as the number of rooms used for the business and how much time you work from home.

Alternatively, eligible sole traders can use HMRC’s simplified expenses for working from home.

The current flat rates are:

The flat rate does not include telephone or internet costs, so the business proportion of these can be considered separately. Simplified expenses are optional rather than compulsory.

Can I claim for my car and business mileage?

If you use a vehicle for business journeys, there are broadly two methods that may be available: claiming the appropriate business proportion of actual vehicle costs or using HMRC’s simplified mileage rates.

Actual vehicle costs can include items such as:

• Fuel
• Insurance
• Repairs and servicing
• Vehicle tax
• Breakdown cover
• Hire charges

Any private use needs to be excluded.

Alternatively, simplified mileage expenses can be used for qualifying cars, goods vehicles and motorcycles.

For 2026/27, the rates for cars and goods vehicles are:

The motorcycle rate is 24p per business mile.

The first car/goods-vehicle rate increased from 45p to 55p with effect from 6 April 2026.

Once you use the simplified mileage method for a particular vehicle, there are restrictions on subsequently changing how you claim for that vehicle, so it is worth considering which method is appropriate before making the choice.

Parking and other qualifying travel expenses can potentially be claimed separately from the mileage rate.

What counts as business travel?

Travel undertaken for business purposes can include qualifying journeys to customers, suppliers or temporary business locations, as well as costs such as train fares, taxis, flights, hotels and certain meals on overnight business trips.

Ordinary travel between your home and your normal place of work is generally not allowable, and neither are fines or penalty charges.

Can I claim for food and meals?

This is an area where it’s easy to assume that paying with the business card makes something a business expense.

Your ordinary day-to-day food is normally a personal cost.

However, food and drink may be allowable in particular business travel circumstances, such as qualifying meals during overnight business trips.

The rules around subsistence can depend on the circumstances of the journey, so regularly buying lunch while carrying out your normal work should not automatically be treated as a business expense.

Can I claim for clothing?

Usually, ordinary clothing is not an allowable business expense, even if you bought it specifically for work and would never choose to wear it outside work.

You may, however, be able to claim for:

• Uniforms
• Protective clothing required for your work
• Costumes for actors and entertainers

A suit purchased for meetings, for example, does not become allowable simply because you only intend to wear it for business.

Accountancy, legal and professional fees

Professional costs incurred for business purposes can often be claimed, including qualifying fees for:

• Accountants
• Solicitors
• Surveyors
• Architects
• Professional indemnity insurance

There are exceptions.

For example, HMRC specifically excludes the cost of preparing and submitting the proprietor’s personal Self Assessment tax return from allowable business expenses. Legal costs relating to certain capital transactions may also need different treatment.

Business bank charges, credit card charges and qualifying interest can also be allowable, although repayments of the actual capital borrowed are not themselves an expense.

Advertising, websites and marketing

Costs incurred promoting your business can generally include things such as:

• Advertising
• Website costs
• Mailshots
• Free samples
• Certain trade or professional subscriptions

However, client entertainment is generally not an allowable expense for tax purposes, even where there is a genuine business reason for the meeting or event.

Most business gifts are also subject to restrictions.

This is an important distinction because a cost can be genuinely incurred by the business without necessarily being deductible when calculating taxable profit.

Training and professional development

Training costs can be allowable where they help you maintain or improve skills and knowledge you already use in your business, keep up with changes in your industry, or develop relevant skills to support the existing business.

Training to start an entirely new business or move into an unrelated area is treated differently and is not normally allowable under these rules.

Staff and subcontractor costs

If you employ people or use subcontractors, allowable costs can include:

• Wages and salaries
• Bonuses
• Employer pension contributions
• Employer’s National Insurance
• Agency fees
• Subcontractor costs
• Relevant staff training

Personal domestic help, such as a nanny, cannot simply be treated as a business staffing expense.

Stock and materials

Goods purchased for resale and raw materials used in providing your products or services are generally business costs.

Under the cash basis, expenses are normally recorded when they’re actually paid, rather than simply when you receive a bill.

This is particularly relevant now that the cash basis is the default method of calculating trading profits for many sole traders, although businesses can opt out where appropriate.

What about expenses that are partly personal?

A cost does not necessarily become completely disallowable simply because there is some private use.

Where the business element can be identified, you can often claim that part.

Common examples include:

• Mobile phones
• Broadband
• Vehicles
• Household costs when working from home

The important thing is to use a reasonable basis for the amount claimed and keep sufficient records to support it.

Common expenses you usually cannot claim

Some of the areas that commonly cause confusion include:

• Everyday clothing
• Ordinary commuting
• Personal expenditure
• Client entertainment
• Fines and penalties
• Most business gifts
• The cost of preparing your personal Self Assessment return
• The private proportion of mixed-use expenses

There can be exceptions and additional rules depending on the expense, so a payment should not be included or excluded purely because it appears on a generic checklist.

Do I need to keep receipts?

You need to keep adequate records of your business income and expenses so that you can support the figures included in your Self Assessment return.

You do not normally send all of your receipts to HMRC when filing the return, but you need to retain appropriate records in case HMRC asks to check them.

Good bookkeeping also makes it considerably easier to identify allowable expenses rather than trying to reconstruct an entire year’s spending when the tax return is due.

Allowable expenses reduce your taxable profit

One of the most common misunderstandings is that claiming an expense means HMRC effectively pays for it.

It doesn’t.

If your business has £50,000 of income and £10,000 of allowable expenses, you would generally start with a profit of £40,000 rather than £50,000 when calculating the taxable profit, subject to any further tax adjustments.

The expense therefore reduces the profit on which tax is calculated. It does not normally give you the full cost of the purchase back.

Not sure whether something is allowable?

There are plenty of straightforward expenses, but there are also situations where the answer depends on what was purchased, why it was purchased, how it is used and how the business accounts are prepared.

If you’re unsure, it is better to check than simply leave an expense out or assume that everything paid from the business bank account is deductible.

Baldwin’s Accountancy Services helps sole traders with bookkeeping, accounts and Self Assessment, including identifying appropriate business expenses and making sure they’re treated correctly.