One of the most common questions we hear from sole traders and self-employed people across Erith, Bexley and the surrounding area is: "What exactly can I claim as a business expense?" It is a fair question — HMRC's guidance is spread across multiple pages and can be confusing, and missing legitimate expenses means you overpay tax unnecessarily.
This guide covers the most common allowable expenses for UK sole traders, with practical examples of what qualifies and what does not.
The basic rule
An expense is allowable if it is "wholly and exclusively" for the purpose of your business. HMRC applies this test strictly — if an expense has a private element as well as a business element, only the business proportion can be claimed (or in some cases, none of it).
Office and admin costs
If you work from home, you can claim a proportion of your household bills — heating, electricity, broadband, water — based on how much of your home is used for work and for how many hours per day. HMRC also allows a simplified flat rate (£10–£26/month depending on hours worked from home) which avoids the need to calculate the exact proportion.
Other allowable office and admin costs include: stationery, postage, printer ink and paper, phone bills (business proportion), software subscriptions and accounting fees.
Travel and vehicles
Business mileage in your own car can be claimed at HMRC's approved mileage rates — 45p per mile for the first 10,000 miles per year, then 25p. Keep a mileage log that records the date, destination, purpose and miles for each journey.
Public transport costs for business travel — trains, buses, taxis — are also allowable. Commuting from home to a regular place of work is not.
Equipment and tools
Equipment you buy for your business — tools, machinery, computers, cameras, specialist kit — can be claimed under the Annual Investment Allowance (AIA), which allows 100% of the cost to be deducted in the year of purchase up to the AIA limit. This is particularly valuable for tradespeople and contractors.
If you use an item for both business and personal purposes (such as a laptop), you can only claim the business proportion.
Professional services
Accountancy fees, legal fees related to your business, professional subscriptions and business insurance premiums are all allowable. Your accountant's fee — including the fee you pay BDH — is a deductible business expense.
Marketing and advertising
Website costs, advertising, business cards, online ads, photography for your business and subscriptions to business directories are all allowable. Client entertainment is generally not allowable — HMRC does not allow deductions for taking clients to lunch or events.
Staff and subcontractors
Wages, salaries and subcontractor payments are allowable business expenses. If you pay CIS subcontractors, keep records of all payments and deductions as these form part of your Self Assessment return. See our CIS accounting service for more detail.
Training and professional development
Training that updates or improves skills you already use in your business is allowable. Training that teaches you an entirely new trade or profession is generally not. A builder attending a health and safety refresher course — allowable. The same builder attending an accountancy course — not allowable.
What is not allowable
The most common disallowed expenses are: client entertaining, personal clothing (unless it is a uniform or protective equipment specific to your work), fines and penalties, and any costs with a significant personal element that cannot be separated from the business use.
Keep your records
HMRC can request evidence of any expense you claim. Keep receipts, invoices and bank statements for at least five years after the submission deadline of the relevant tax year. A simple folder — physical or digital — is sufficient for most sole traders.
Not sure what you can claim?
One of the most useful things a good sole trader accountant does is review your records and identify expenses you may have missed. Many of our clients are surprised by how much they were previously leaving unclaimed.
Book a free consultation with BDH — we cover Erith, Bexley, Dartford and the wider area. We will review your situation and make sure you are claiming everything you are entitled to.