Claiming your allowable expenses is the simplest legal way for a sole trader to cut a tax bill. You can claim any cost incurred wholly and exclusively for the business, office costs, travel, stock, marketing, professional fees, a share of home and phone bills, and certain financial charges. Every pound of allowable expense reduces your taxable profit, which lowers both your Income Tax and your Class 4 National Insurance.
The catch is that "wholly and exclusively" test. Below is the full 2026/27 list, the items HMRC will reject, and the two methods you can use to work them out.
Why Allowable Expenses Matter for Your Tax Bill
Your tax is charged on profit, not turnover. Profit is income minus allowable expenses, so miss a legitimate expense and you pay tax on money you have already spent running the business.
With the personal allowance frozen at £12,570, the basic rate running to £50,270, and the additional-rate threshold at £125,140 for 2026/27, every deduction keeps more of your income out of the higher bands. For a higher-rate trader, £1,000 of overlooked expenses is roughly £420 in wasted tax and NIC.
The Full List of Allowable Expenses for Sole Traders
These are the standard categories HMRC accepts for the self-employed.
| Category | What you can claim |
|---|---|
| Office & admin | Stationery, printing, postage, software subscriptions, business phone and broadband |
| Premises | Rent, business rates, utilities, insurance, security, repairs (not the building itself) |
| Stock & materials | Goods for resale, raw materials, direct production costs |
| Travel | Mileage or fuel, train and bus fares, parking, hotels and meals on overnight trips |
| Vehicle | Running costs, servicing, insurance, breakdown cover (business-use proportion only) |
| Staff | Salaries, employer's NIC, pensions, subcontractor costs, training for existing skills |
| Marketing | Website, advertising, mailshots, free samples, trade directory listings |
| Professional fees | Accountancy, bookkeeping, legal advice, professional indemnity and other insurances |
| Financial | Bank and credit-card charges, interest on business loans, lease payments, bad debts written off |
| Clothing | Uniforms, branded kit, protective wear (never everyday clothing) |
| Capital items | Equipment, machinery, computers, vans, via the Annual Investment Allowance |
Capital Allowances and the Annual Investment Allowance
Larger one-off purchases, a laptop, tools, a van, are usually claimed as capital allowances rather than day-to-day expenses. The Annual Investment Allowance (AIA) lets you deduct the full cost of qualifying equipment up to £1,000,000 a year. For most sole traders that means 100% relief in the year you buy.
Working From Home Expenses
You can claim a fair share of household costs based on the business-use proportion, or use HMRC's simplified flat rate:
| Hours worked from home per month | Flat-rate claim |
|---|---|
| 25-50 hours | £10/month |
| 51-100 hours | £18/month |
| 101+ hours | £26/month |
Vehicle Expenses: Actual Cost vs Simplified Mileage
Two methods, and you pick one per vehicle:
- Simplified mileage, 55p per mile for the first 10,000 business miles in the year, then 25p per mile thereafter. This covers fuel, servicing, insurance and depreciation. Fully electric cars use the same rates.
- Actual costs, claim the business-use proportion of every running cost plus capital allowances on the vehicle.
Once you choose mileage for a vehicle you must stick with it for as long as you own that vehicle, so decide carefully. Private journeys, including commuting from home to a regular workplace, are never allowable.
Expenses You Cannot Claim as a Sole Trader
HMRC routinely disallows:
- Everyday clothing, even if you only wear it for work
- Client entertaining and hospitality
- Fines and penalties, including parking fines and late-filing penalties
- Your own wages, drawings or personal tax
- The cost of buying business premises (capital, not an expense)
- Anything with a private element you cannot reasonably split out
When a cost is part-business, part-private, a mobile phone, say, claim only the business proportion and keep a record of how you worked it out.
Trading Allowance vs Claiming Expenses
If your self-employed income is small, the £1,000 trading allowance may beat itemising. You deduct a flat £1,000 from gross income instead of claiming actual expenses, handy for a side hustle with low costs.
It is either/or: take the trading allowance or deduct real expenses, never both. If your expenses exceed £1,000, claim the actual figures. If your total trading income is under £1,000, you usually do not need to report it at all.
How VAT Affects Your Allowable Expenses
You only register for VAT once turnover passes £90,000 in a rolling 12-month period. Below that, VAT-inclusive prices are simply part of your allowable expense. Once registered, you reclaim input VAT separately and claim the net figure as an expense.
Frequently Asked Questions
Can I claim expenses without receipts?
Keep evidence for every claim, receipts, invoices or bank statements. HMRC can ask you to prove an expense for up to six years, and unsupported claims may be disallowed on enquiry. For small cash items, a log kept at the time helps.
Can a sole trader claim for meals?
Only in limited cases: meals on overnight business trips, or while travelling to a temporary workplace away from your normal base. Everyday lunches near your usual place of work are not allowable.
Are accountancy and bookkeeping fees allowable?
Yes. Fees for accountancy, bookkeeping and preparing your business accounts are fully allowable. Advice on tax disputes or non-business matters generally is not. See our FAQ for more on what counts.
Do I claim expenses if I use the trading allowance?
No. Using the £1,000 trading allowance means you cannot also deduct actual expenses. Compare the two each year and use whichever gives the lower taxable profit.
For the official rules, see HMRC's guidance on expenses if you're self-employed.
Claiming everything you are entitled to is the cheapest tax saving there is, but only if it is logged correctly and stands up to an HMRC enquiry. Zmartly handles bookkeeping and Self Assessment for sole traders across the UK, so nothing allowable slips through. Get in touch for a free review of what you could be claiming this year.
