What Expenses Can Sole Traders Claim?

One of the most effective ways to reduce your tax bill as a sole trader is to claim all the business expenses you’re entitled to. Yet many self-employed people either miss expenses they could legitimately claim, or claim things they shouldn’t — both of which cause problems. This guide covers the main allowable expenses for sole traders in the UK.

What Counts as an Allowable Business Expense?

HMRC allows you to deduct expenses that are incurred “wholly and exclusively” for the purposes of your business. If an expense is partly personal and partly business, you can only claim the business proportion. Personal expenses cannot be claimed at all.

Allowable expenses reduce your taxable profit — so if your income is £40,000 and you have £8,000 of allowable expenses, you only pay tax on £32,000. This directly reduces your Self Assessment tax liability.

Common Allowable Expenses for Sole Traders

Office and Admin Costs

• Stationery, postage, and printing
• Phone and broadband (business proportion)
• Software subscriptions used for work
• Accountancy and bookkeeping fees
• Bank charges on your business account

Travel and Vehicles

• Fuel, insurance, repairs, and servicing (business use proportion)
• Mileage — you can use HMRC’s flat rate of 45p per mile for the first 10,000 miles, then 25p per mile
• Public transport fares for business travel
• Parking and tolls on business journeys

Note: commuting between home and a fixed place of work is not allowable — only travel for business purposes counts.

Working From Home

• You can claim a proportion of home running costs (heating, electricity, broadband) based on the area and time used for business
• Alternatively, HMRC’s flat rate: £10/month (25–50 hours), £18/month (51–100 hours), or £26/month (101+ hours)

Staff and Subcontractors

• Wages and salaries paid to employees
• Subcontractor costs
• Employer’s National Insurance contributions
• Pension contributions for staff

Marketing and Advertising

• Website costs and hosting
• Online advertising (Google Ads, social media)
• Business cards, leaflets, and promotional materials
• Directories and listings

Training and Professional Development

• Courses and training directly related to your current trade
• Professional memberships and subscriptions

Training to start a new type of business or career is not allowable — it must be relevant to your existing self-employment.

Stock and Materials

• Raw materials and components used in your work
• Goods purchased for resale
• Packaging

Insurance

• Public liability insurance
• Professional indemnity insurance
• Business insurance policies

What You Cannot Claim

• Your own salary or drawings
• Personal clothing (unless it’s a uniform or protective gear)
• Personal mobile phone or broadband usage
• Food and drink (except in very specific circumstances, such as overnight business travel)
• Client entertainment
• Fines or penalties

Capital Allowances

Large purchases such as equipment, computers, machinery, and vehicles aren’t usually claimed as a straightforward expense — instead, you claim capital allowances. The Annual Investment Allowance (AIA) currently lets you deduct the full cost of qualifying equipment up to £1 million in the year of purchase. See HMRC’s guidance on capital allowances for the full rules.

Keep Your Records

HMRC can ask to see evidence of any expense you’ve claimed for up to five years after the relevant Self Assessment deadline. Keep your receipts, invoices, and bank statements — and if you’re using MTD-compatible software, make sure everything is recorded digitally. Failing to keep adequate records can result in penalties from HMRC.

Not Sure What You Can Claim?

PBAS works with sole traders to make sure every legitimate expense is captured and correctly recorded — so you pay exactly what you owe and not a penny more. Get in touch if you’d like us to review your expenses or take over your bookkeeping.