Allowable Expenses for UK Sole Traders: A Plain-English Checklist

Sole traders consistently overpay tax because they don't know what they can claim. Here's a plain-English checklist of expenses HMRC will accept — and a few it won't.

The basic rule

HMRC's test is simple: an expense must be "wholly and exclusively" for the purposes of your business. If you can answer "yes, I spent this only because of my business," it's almost certainly allowable. If part of it was personal, only the business portion is.

Office & equipment

• Stationery, printer ink, postage
• Laptops, computers, monitors, peripherals
• Office furniture (desk, chair)
• Phone and internet — business portion only (we usually claim a fair %)
• Software subscriptions (Xero, Microsoft 365, Adobe, etc.)

Working from home

If you use your home as an office, you can claim a portion of your household running costs (rent or mortgage interest, utilities, council tax, broadband) — calculated on the number of rooms used for business and the proportion of time. There's also HMRC's simplified expenses flat rate (£10–£26/month depending on hours), which is easier but often gives a smaller claim.

Vehicle & travel

Two choices:

• Actual costs: claim fuel, insurance, servicing, road tax, MOT, depreciation — business portion only.
• Simplified mileage: 45p per business mile for the first 10,000 miles, then 25p — covers everything in one number. Often easier and bigger.

Trains, taxis, parking, congestion charge and tolls for business journeys are also allowable. Travel from home to a regular workplace is not.

Marketing & professional fees

• Website hosting and design
• Advertising (Google, Meta, print)
• Networking events, trade fairs
• Professional subscriptions (your trade body)
• Accountancy and bookkeeping fees
• Business insurance (public liability, professional indemnity)

Training & development

Training that maintains or updates skills you already use in your business is allowable. New skills that let you do something genuinely new generally aren't — that's treated as a capital investment in yourself.

Clothing

A common trap. Everyday clothes — even smart suits worn for client meetings — are not allowable. What IS allowable: branded uniform, PPE (steel toe boots, hi-vis, hard hats), genuine costumes (entertainers).

Food & entertainment

Subsistence on a genuine business trip away from your regular work base is allowable. Client entertainment is not allowable (this is a hard HMRC rule with no wiggle room). Staff entertainment for an actual employee is allowable up to certain limits.

What HMRC won't accept

• Anything personal in nature (your own meals, your dry cleaning, your gym)
• Fines, penalties, parking tickets
• Drawings (money you take out for yourself isn't an expense)
• Client entertaining
• Everyday clothes

Record-keeping in 2026

HMRC requires you to keep records for at least five years after the 31 January submission deadline. With Making Tax Digital for Income Tax rolling out from 2026/2027, digital records will be required for many sole traders above the threshold. Easiest setup: a free or low-cost bookkeeping app (FreeAgent, Xero, QuickBooks) plus a habit of photographing receipts the day you get them.

Quick wins most sole traders miss

1. Claiming a fair business % of home utilities, not just the simplified £6/week.
2. Claiming the right mileage rate (45p) instead of just fuel.
3. Pre-paying allowable subscriptions before year-end to bring the relief forward.
4. Pension contributions — not a business expense per se, but they reduce your taxable profit if structured correctly.

If you'd like us to review your expense claims before you submit your next Self Assessment, book a free consultation — we usually find allowable expenses people forgot they could claim.