Written by the TaxTune Editorial Team·Reviewed by our qualified accountants·Updated June 2026

Common allowable expenses

The golden rule is that a cost must be wholly and exclusively for your business to be allowable. If something is used partly for business and partly for personal life, you claim only a fair business proportion of it.

Most sole traders can claim the everyday running costs of the business, including:

  • Office and admin such as stationery, postage, printing and software subscriptions.
  • Phone and broadband at the business share. If you use your mobile 60% for work, you claim 60% of the bill.
  • Travel for business journeys, using either the mileage method or a business share of actual running costs.
  • Stock and materials that you buy to sell on or to use directly in the work you do.
  • Tools and equipment, usually through capital allowances, which we explain below.
  • Professional fees and insurance such as accountancy fees, public liability cover and trade body subscriptions.
  • Marketing including your website, advertising, business cards and social media promotion.
  • Bank and finance costs such as business account charges, card processing fees and interest on a business loan.

For the mileage method you can claim 45p per business mile for the first 10,000 miles in the tax year, then 25p per mile after that, for a car or van. The alternative is to claim a business share of actual running costs plus capital allowances on the vehicle, but you cannot use both methods for the same vehicle. Our guide to allowable expenses for Self Assessment goes into more detail on each category.

Expenses people often miss

Plenty of genuine costs slip through the net simply because people forget about them or assume they do not count. Common ones include:

  • Working from home. You can use the simplified flat rate of £10 a month for 25 to 50 hours of work at home, £18 a month for 51 to 100 hours, or £26 a month for 101 or more hours. Alternatively you can claim a fair share of your actual household bills such as heating, electricity and metered water.
  • Training that updates or refreshes the skills you already use in your business.
  • Bank charges and card fees on a dedicated business account, which are easy to overlook.
  • Small tools and consumables bought a few pounds at a time across the year.
  • Professional subscriptions to a recognised trade body or institute relevant to your work.
  • Protective clothing and branded uniform, which are allowable even though everyday clothes are not.

Keeping good bookkeeping records throughout the year is the simplest way to make sure none of these are forgotten when it is time to file.

Risky or commonly challenged expenses

Some costs are allowable in part but get challenged when claimed in full, and a few are never allowable at all. It pays to be careful with these.

  • Everyday clothing is not allowable, even if you only wear it for work. Only protective clothing, a branded uniform or a costume counts.
  • Client entertaining is never allowable, no matter how important the relationship. Subsistence for yourself on a genuine business trip is fine, but a meal to entertain a client is not.
  • Mixed use items such as a phone, laptop or car must be split at a fair business proportion, not claimed in full.
  • The cost of getting to a regular place of work is treated as ordinary commuting and is not allowable.

If a cost has both a business and a private purpose, claim only the business part and keep a note of how you worked out the split.

Records to keep

You do not send receipts to HMRC, but you must be able to back up every figure on your tax return if asked. Good records also mean you claim everything you are entitled to.

  • Keep invoices and receipts for everything you buy for the business.
  • Keep bank statements and a record of mileage if you use the mileage method.
  • Note the business proportion you used for any mixed use item.
  • Keep records for at least 5 years after the 31 January filing deadline.

Under Making Tax Digital you will need to keep your records digitally, so it is worth getting into good habits now. See our explainer on Making Tax Digital for what is coming.

A worked example

Worked example

Priya, a self employed photographer

Priya has turnover of £45,000 for the year. Her allowable costs are £4,000 of equipment claimed through the Annual Investment Allowance, £2,500 of travel using the mileage method, £1,800 of stock and props, £312 for working from home at £26 a month, £600 of insurance and professional fees, £900 of marketing, and £400 of phone and broadband at the business share. Her total allowable expenses come to £10,512. Her taxable profit is £45,000 minus £10,512, which is £34,488. Priya pays Income Tax and National Insurance on £34,488 rather than on the full £45,000.

Equipment such as Priya's cameras is usually claimed through capital allowances. The Annual Investment Allowance gives 100% relief on up to £1,000,000 of qualifying equipment in the year you buy it, so most sole traders get full relief in year one.

Common mistakes

A few errors come up again and again, and each one either costs you money or risks a query from HMRC.

  • Claiming personal costs, or the full cost of a mixed use item, instead of a fair proportion.
  • Forgetting working from home, training and small tools, so paying more tax than you need to.
  • Trying to claim client entertaining, which is never allowed.
  • Claiming both the £1,000 trading allowance and your actual expenses, when you may only use one or the other.
  • Mixing personal and business spending in one account, which makes the records hard to untangle.

If your total income from the business is under £1,000 you usually need not report it. Above that, you can deduct either the £1,000 trading allowance or your actual expenses, whichever is higher, but not both.

What you should do

Start by opening a separate account for the business and running all income and costs through it. Save every receipt, log your business mileage, and note the business share of anything you also use privately.

Once a quarter, review your records so nothing is missed and your figures stay up to date. If you would like a hand, our team can take care of the lot for you. You can read more about Self Assessment or start your quote whenever you are ready.

In short

As a sole trader you can claim costs that are wholly and exclusively for your business, which lowers your taxable profit.

Frequently asked questions

Can I claim for working from home as a sole trader?
Yes. You can use the simplified flat rate, which is £10 a month for 25 to 50 hours of work at home, £18 a month for 51 to 100 hours, or £26 a month for 101 or more hours. If your actual costs are higher, you can instead claim a fair share of your real household bills such as heating and electricity. You cannot use both methods at the same time, so pick whichever gives the larger and most accurate result.
Should I use the mileage method or actual vehicle costs?
It depends on your situation. The mileage method lets you claim 45p per business mile for the first 10,000 miles in the tax year, then 25p per mile, and it is simple to run. The alternative is to claim a business share of actual running costs plus capital allowances on the vehicle. You cannot use both methods for the same vehicle, so once you choose the mileage method for a vehicle you must stick with it for that vehicle.
What is the trading allowance and should I use it?
The trading allowance is £1,000. If your income from the business is under £1,000 you usually do not need to report it at all. If it is above £1,000, you can deduct either the £1,000 allowance or your actual expenses, whichever is higher, but not both. If your real costs are well above £1,000, claim your actual expenses instead, as that will reduce your taxable profit by more.
How do I claim for equipment like a laptop or tools?
Equipment is usually claimed through capital allowances rather than as an everyday expense. The Annual Investment Allowance gives 100% relief on up to £1,000,000 of qualifying equipment in the year you buy it, which means most sole traders get the full cost relieved straight away. Keep the purchase invoices, and if you also use the item privately, claim only the fair business proportion.
How long do I need to keep my records?
Keep your records for at least 5 years after the 31 January filing deadline for that tax year. So for a return filed by 31 January, you would keep the supporting paperwork for five years from that date. Under Making Tax Digital you will also need to keep these records digitally, so storing them electronically from the start makes life much easier.