Claimable Business Expenses for Sole Traders (2026/27): UK Guide to Allowable Expenses 

Claiming every allowable expense lowers your taxable profit, which reduces your Income Tax and Class 4 National Insurance. This guide is updated for the 2026/27 tax year. For an in-depth exploration of allowable expenses and their impact on your finances, our guide on sole trader Accounting is an invaluable resource.

HMRC defines allowable expenses as expenses that are “wholly and exclusively” for the purpose of your business. Expenses must be incurred wholly and exclusively for business purposes. If an expense has both business and personal use, you can usually claim only the business proportion. As a sole trader, you can claim a wide range of expenses, including office rent, equipment, travel expenses, and marketing costs. However, keep accurate records of all expenses and receipts to support your claims.

What Has Changed for Sole Traders in 2026/27?

• From 6 April 2026, Making Tax Digital for Income Tax applies to self-employed individuals earning qualifying gross revenue above £50,000. This threshold reduces to £30,000 in April 2027 and £20,000 in April 2028.
• The cash basis has become the standard reporting mechanism for self-employed individuals, removing the previous turnover threshold restrictions completely.
• Introduced in January 2026, a 40% initial-year allowance covers qualifying equipment purchases, alongside a reduced main pool writing-down allowance of 14% effective April 2026.
• You can still claim up to £1 million annually through the Annual Investment Allowance (AIA).
• From 6 April 2026, simplified vehicle rates increase to 55p per mile for the initial 10,000 business miles (remaining at 25p thereafter and 24p for motorbikes). Flat-rate working-from-home allowances remain fixed at £10, £18, or £26 monthly.

What Business Expenses Can Sole Traders Claim?

As a sole trader, you will incur various costs while running your business. You can deduct some of these costs to work out your taxable profit, provided they are allowable expenses. Understanding what constitutes an allowable expense is essential to ensure you don’t miss out on tax relief. Here are some key points to help you understand business expenses.

What Are Allowable Expenses for Sole Traders?

Allowable expenses are business costs that HMRC allows self-employed people, sole traders, and freelancers to claim as tax expenses against their profits. These expenses are incurred wholly and exclusively for business purposes and relate directly to running your business. Examples of allowable expenses include office rent, stationery, and equipment costs, travel expenses, and professional fees.

Criteria for Tax Deductibility

For an expense to be tax-deductible, it must meet the following criteria:

• It must be incurred wholly and exclusively for business purposes.
• It must be a revenue expense, or capital spending that you can relieve through the cash basis or capital allowances.
• It must not be a personal expense.

Revenue expenses are costs that are incurred in the normal course of running a business, such as rent, salaries, and utility bills. Capital expenses, on the other hand, are costs that are incurred to acquire or improve a long-term asset, such as a building or equipment. Under the accruals basis (traditional accounting), you cannot deduct capital expenses as an expense, so you claim capital allowances instead. Under the cash basis, you can usually deduct the cost of equipment straight away, but cars still need capital allowances.

Capital vs Revenue Expenses: What’s the Difference?

It is essential to differentiate between capital and revenue expenditure. Revenue expenditure is deductible straight away. Capital expenditure is relieved differently depending on your accounting method. Under the cash basis, you deduct most equipment as an expense (cars are the exception). Under the accruals basis, you claim capital allowances. The Annual Investment Allowance (AIA) gives 100% relief on up to £1 million a year of qualifying equipment, but not cars. A new 40% first-year allowance has applied to new main-rate equipment since January 2026, and it is mainly useful once you’ve used up your AIA. The main pool writing-down allowance fell from 18% to 14% from April 2026. Full expensing is for limited companies only.

Common Business Expenses Sole Traders Can Claim

As a sole trader, you are entitled to claim expenses that are incurred wholly and exclusively for business purposes. Everyday Business Expenses Sole Traders Can Claim are costs associated with the day-to-day running of your business. Here are some of the most common operating expenses that you can claim:

Rent and Business Premises Costs

If you rent business premises, you can claim the rent as a business expense. However, if you work from home, you can only claim a proportion of your home expenses. This includes rent or mortgage interest (interest only, never the capital repayments), council tax, water rates, electricity, gas and broadband. You can claim a fair business share, for example based on the number of rooms used for work and how often you use them, or use HMRC flat rates instead (see Working from Home below).

Utility Bills

Utility bills such as electricity, gas, and water rates are essential for running your business. You can claim these bills as business expenses if they are incurred wholly and exclusively for business purposes.

Insurance

You can claim insurance costs as a business expense. This includes public liability insurance, professional indemnity insurance, and employer’s liability insurance.

Repairs and Maintenance

You can claim the cost of repairs and maintenance to your business premises, equipment, and vehicles as a business expense. This includes repairs to your computer, printer, and office furniture.

Can Sole Traders Claim Travel and Vehicle Expenses?

As a sole trader, you can claim expenses for any travel that is related to your business. This includes business mileage, travel expenses, fuel, accommodation, and meals. Here are some of the most common travel and vehicle expenses you can claim:

Can Sole Traders Claim Car and Vehicle Expenses?

If you use a car or van for business purposes, you can claim the vehicle’s running costs, including fuel, insurance, repairs, and servicing. However, if you use the vehicle for personal use as well, you can only claim a proportion of the costs that relate to business use.

You can also claim for vehicle hire charges, vehicle licence fees, and breakdown cover. Keep in mind that a car’s purchase price is not a running cost. You claim it through capital allowances, and you can still claim the business share of fuel, insurance, repairs and servicing. 

Alternatively, use HMRC’s simplified mileage rates: 55p a mile for the first 10,000 business miles, 25p after that, and 24p for motorcycles. The flat rate replaces the cost of buying and running the vehicle, but you can still claim parking and tolls on top. You can’t use it for a vehicle you’ve already claimed capital allowances on or deducted as an expense, or for vehicles built for commercial use, such as black cabs and dual-control driving school cars. Once you use the flat rate for a vehicle, you must keep using it for as long as that vehicle is in your business.

What Travel Expenses Can Sole Traders Claim?

You can claim for any other business-related travel costs, such as train, air, or taxi fares for business purposes. However, you cannot claim for travel between your home and regular workplace.

Claimable Travel Costs	Travel Costs
Train fares	✓
Air fares	✓
Taxi fares	✓
Travel between home and work	⨯

Can Sole Traders Claim Hotels and Meals?

If you need to stay away from home for business purposes, you can claim for hotel rooms and meals during overnight business trips. However, you cannot claim for non-business driving or travel costs, fines, or travel between home and work.

Table	Accommodation and Meals
Hotel rooms	✓
Meals during overnight business trips	✓
Non-business driving or travel costs	⨯
Fines	⨯
Travel between home and work	⨯

Keep accurate records of all your business travel expenses, including receipts and invoices. This will make it easier to claim back any expenses you are entitled to.

What Office Expenses Can Sole Traders Claim?

As a sole trader, you can claim expenses for office costs that are incurred wholly and exclusively for business purposes. This includes stationery, printing, postage, and office equipment.

Claiming office expenses is straightforward when these costs are solely for business use. This encompasses everything from stationery to significant office equipment purchases. However, it becomes more complex if you work from home. You must accurately calculate the portion of home expenses attributable to your business. For detailed guidance on how to approach this, our Working from Home article provides clarity on what you can and cannot claim.

Stationery and Printing

You can claim expenses for stationery and printing, including paper, envelopes, pens, and other office supplies. You can also claim expenses for printer ink and cartridges. However, you cannot claim expenses for stationery and printing that are used for personal purposes.

Postage

You can claim postage expenses, including stamps, courier charges, and other delivery costs. This includes postage for business letters, parcels, and packages. However, you cannot claim expenses for postage that is used for personal purposes.

Office Equipment

You can claim expenses for office equipment, including computers, printers, and other electronic devices. You can also claim expenses for office furniture, such as desks and chairs. However, you cannot claim expenses for office equipment that is used for personal purposes.

Can Sole Traders Claim Employee and Staffing Costs?

As a sole trader, you may have employees who help you run your business. You can claim staff and personnel expenses as allowable expenses, as long as you incur them wholly and exclusively for business purposes.

Salaries and Wages

You can claim salaries and wages paid to your employees as an allowable expense. You cannot pay yourself a salary as a sole trader, so your own drawings are not an expense. This includes payments made to part-time, full-time, and temporary staff. It is important to keep accurate records of all payments made to your employees, including any bonuses or overtime payments.

Benefits

If you provide benefits to your employees, such as health insurance or gym memberships, you can claim these as allowable expenses. The cost is usually allowable if it is wholly and exclusively for your business, but your employees may owe tax on it, and you may have to report it to HMRC. You cannot claim benefits for yourself, such as your own private health insurance.

Pension Contributions

As an employer, you may be required to make pension contributions on behalf of your employees. You can claim these contributions as allowable expenses, as long as they are made to a registered pension scheme.

Agency Fees

If you use a recruitment agency to find staff for your business, you can claim the fees paid to the agency as an allowable expense. Recruitment fees are generally allowable whether the hire is temporary or permanent.

Can Sole Traders Claim Marketing and Advertising Expenses?

As a sole trader, you can claim expenses related to marketing and advertising your business. These expenses can include advertising costs, marketing materials, and promotional activities.

Advertising Costs

Advertising costs are expenses incurred in promoting your business to potential customers. This can include online advertising, print ads, billboards, and radio or TV commercials. You can claim the full cost of advertising, as long as it is wholly and exclusively for business purposes. If the advertising is partly for personal purposes, you can only claim the portion that is related to your business.

Marketing Materials

Marketing materials are items used to promote your business, such as brochures, flyers, business cards, and branded merchandise. You can claim the full cost of producing and distributing marketing materials, as long as they are wholly and exclusively for business purposes. If the materials are partly for personal purposes, you can only claim the portion that is related to your business. Branded gifts such as mugs, pens or diaries are limited to £50 per recipient per tax year, and gifts of food, drink, tobacco or vouchers are never allowable.

Promotional Activities

Promotional activities are events or activities that promote your business, such as trade shows, sponsorships, and giveaways. You can claim the cost of promotional activities, as long as they are wholly and exclusively for business purposes. If the activity is partly for personal purposes, you can only claim the portion that is related to your business. Giveaways follow the same £50 gift rule. Free samples of what you sell and prizes in competitions open to the public are generally fine.

Can Sole Traders Claim Accountant and Professional Fees?

As a sole trader, you can claim expenses for professional services you use in running your business. These expenses include fees paid to accountants, solicitors, surveyors, architects, and other professionals. Below are some of the professional services you can claim as allowable expenses.

Professional services, such as those provided by accountants or legal advisors, are vital for some aspects of running your business. Whether it’s for drafting contracts or preparing annual accounts, these services often prove indispensable. Recognising the importance of this, we offer tailored Tax Returns Services designed to optimise your tax reporting and ensure compliance.

Can Sole Traders Claim Accountant Fees?

As a sole trader, you can claim expenses for the fees paid to your accountant for preparing your annual accounts, tax returns, and other financial statements. You can also claim for the cost of software and subscriptions used for ac counting, including Making Tax Digital (MTD) compatible software. Keep in mind that you can only claim for the services that are directly related to your business.

Can Sole Traders Claim Legal Fees?

You can claim expenses for legal services that support your business operations. This encompasses costs associated with obtaining legal counsel, preparing contracts, or drafting official documentation required for your enterprise. Non-business legal expenditures, including personal legal representation or advice, are not tax-deductible.

Consultancy Services

If you need to hire a consultant to provide professional advice or services related to your business, you can claim the fees as allowable expenses. This includes fees for marketing consultants, business consultants, and any other consultants you use for your business.

Make sure to keep accurate records of all professional service expenses, including invoices and receipts. This will help you when it comes to preparing your tax returns and claiming allowable expenses.

Can Sole Traders Claim Working From Home Expenses?

As a sole trader, you may be working from home and incurring costs related to your home office. These expenses can be claimed as allowable expenses when calculating your taxable profits. There are two ways to claim working from home expenses as a sole trader: HMRC flat rates (simplified expenses) or your actual costs, worked out as a fair business share.

Flat rate: if you work from home for at least 25 hours a month, you can claim £10 a month for 25 to 50 hours, £18 for 51 to 100 hours, or £26 for 101 hours or more. That is a maximum of £312 a year. Use HMRC’s simplified expenses checker to compare it with your actual costs.

How Much Can You Claim for a Home Office?

If you have a dedicated space in your home that you use exclusively for business purposes, you can claim the expenses related to that space as Home Office Costs. These expenses include:

• Heating, lighting, and electricity
• Business rates
• Rent
• Property insurance
• Repairs and maintenance

You can claim a proportion of these costs based on the size of your home office in relation to the rest of your home. For example, if your home office takes up 10% of the total floor space of your home, you can claim 10% of the relevant costs.

Proportion of Household Expenses

If you don’t have a dedicated space in your home for business purposes, you can still claim a proportion of your household expenses as allowable expenses. These expenses include:

• Mortgage interest
• Council tax
• Water rates
• Insurance
• Repairs and maintenance

You can claim a fair business share of these costs. HMRC does not set one method, so use a reasonable one and keep your workings. For example, if you use one of five rooms (20%) for 25 of the 168 hours in a week (about 15%), a reasonable business share is about 3% of your household costs.

Make sure to keep accurate records of all your allowable expenses, including those related to working from home. If you claim rent or mortgage interest for a room used only for business, speak to an accountant about the possible Capital Gains Tax effect when you sell your home. You should keep receipts, invoices, and bank statements to support your claims.

Other Allowable Expenses Sole Traders Can Claim

As a sole trader, you can claim various miscellaneous expenses that are incurred wholly and exclusively for the purposes of your business. Here are some of the most common miscellaneous expenses that you can claim:

Clothing

If you are required to wear a uniform or protective clothing for your business, you can claim for the cost of purchasing and maintaining them. This includes items such as safety boots, hard hats, and hi-vis jackets. However, you cannot claim for everyday clothing, even if you wear it exclusively for work.

Subscriptions and Memberships

If you need to subscribe to a professional body or trade association to carry out your work, you can claim for the cost of membership. You can also claim for the cost of relevant trade publications and subscriptions to professional journals. However, you cannot claim for memberships to social clubs or gyms.

Can Sole Traders Claim Training Courses?

If you need to attend a training course or seminar to improve your skills or knowledge, you can claim for the cost of tuition fees, travel, and accommodation. You can claim training that maintains, updates, or develops skills relevant to your existing business. However, training undertaken to start a new business, enter a substantially different trade, or for personal interest is generally not allowable.

When claiming any of these miscellaneous expenses, make sure to keep accurate records and receipts. You should also ensure the expenses are incurred wholly and exclusively for business purposes and are not personal in nature.

Cash Basis vs Traditional Accounting for Sole Traders

Sole traders use one of two accounting methods: cash basis or traditional accounting (also called the accruals basis). Since 6 April 2024, cash basis has been the default for most sole traders, with no turnover limit. You must opt out on your Self Assessment return to use traditional accounting. Both methods have advantages and disadvantages, so choose the one that best suits your business needs.

Choosing the right accounting method, be it traditional or cash basis, is more than just a procedural decision; it fundamentally affects how your business’s financial health is reported and analysed. For a deeper understanding of these methods and to make an informed decision, refer to our guide on Accounting for Limited Companies, which also offers valuable insights for sole traders.

Traditional Accounting

Traditional accounting (the accruals basis) is the method limited companies must use, but for sole traders it is now the exception. Under this method, you record income and expenses when you earn or incur them, regardless of when you actually receive or make payment. This means you must track your accounts receivable and accounts payable.

One advantage of traditional accounting is that it gives you a more accurate picture of your business’s financial health. However, it can also be more complicated and time-consuming, which is why most sole traders now stay on the cash basis.

Cash Basis Accounting

Cash basis accounting is a simpler method of accounting where income and expenses are recorded when they are actually received or paid. This means you don’t need to track accounts receivable and accounts payable. Cash basis suits most sole traders, including those with a higher turnover, because the old £150,000 turnover limit was removed from 6 April 2024. It also lets you deduct equipment costs (except cars) as an expense.

One advantage of cash basis accounting is that it is simpler and easier to maintain. However, it may not give you an accurate picture of your business’s financial health, especially if you have many outstanding invoices.

Simplified Expenses

In addition to traditional accounting and cash basis accounting, sole traders can also use simplified expenses. Simplified expenses are a way of calculating some of your business expenses using a flat rate. You do not need to keep receipts for the costs a flat rate covers, but you must still record your business miles, the hours you work from home, or the people living at your business premises.

Simplified expenses can be used for the following expenses:

• Business expenses for vehicles
• Working from home
• Living in your business premises

Using simplified expenses can save you time and effort, but it may not be the most accurate way of calculating your expenses. Make sure to weigh the pros and cons of each accounting method and choose the one that is best for your business.

What Expenses Can’t Sole Traders Claim?

As a sole trader, there are certain expenses that you cannot claim as tax-deductible expenses. These expenses are called non-deductible expenses. In this section, we will discuss two types of non-deductible expenses: personal expenses and fines and penalties.

Personal Expenses

Personal expenses are expenses that are incurred for your personal use and not for your business. You cannot claim these expenses as tax-deductible expenses. Examples of personal expenses include:

• Clothing and footwear that are not protective clothing
• Personal grooming items such as haircuts and cosmetics
• Personal entertainment expenses such as movie tickets and concert tickets
• Private health insurance premiums
• Private expenses on a business trip, such as a family holiday

Fines and Penalties

Fines and penalties are expenses that are incurred as a result of breaking the law. You cannot claim these expenses as tax-deductible expenses. Examples of fines and penalties include:

• Parking fines
• Speeding fines
• Penalties and interest charged by HMRC, such as for late Self Assessment returns or tax payments
• Fines for breaking the law, such as a traffic violation or a parking ticket

It is important to note that disallowable expenses are also non-deductible expenses. These are expenses that are not tax-deductible because they are not incurred wholly and exclusively for the purposes of your business. Examples of disallowable expenses include:

• Expenses that are not related to your business, such as personal expenses
• Expenses that are capital in nature, such as the cost of buying a new building
• Expenses that cannot be supported by appropriate records, such as receipts, invoices, or other evidence required by HMRC

How to Calculate Taxable Profit as a Sole Trader

As a sole trader, calculating your taxable profits is an important step in determining your tax liability. Taxable profits are the profits you make from your business that are subject to income tax. To calculate your taxable profits, you need to deduct your allowable expenses from your income.

Allowable expenses are costs incurred wholly and exclusively for the purposes of running your business. These expenses can be deducted from your income to reduce your taxable profits. Examples of allowable expenses include office rent, travel expenses, and professional fees.

You report your taxable profit to HMRC through Self Assessment. The deadline for online returns is 31 January after the end of the tax year. From 6 April 2026, sole traders with qualifying income over £50,000 must also use Making Tax Digital for Income Tax. This means keeping digital records, sending four quarterly updates a year (due 7 August, 7 November, 7 February and 7 May) and filing a final declaration. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is your gross income before expenses, not your profit. HMRC uses your 2024/25, 2025/26 and 2026/27 figures respectively to decide when you must start. If your gross trading income is £1,000 or less, the trading allowance may mean you do not need to report it. You can also claim the £1,000 trading allowance instead of your actual expenses, but not both.

When completing your self-assessment tax return, you will need to provide details of your income and expenses. You will also need to provide details of any tax relief you are entitled to. Tax relief reduces the amount of tax you need to pay. It applies to certain expenses, such as pension contributions and charitable donations.

Your taxable profit is your turnover (what your business earned) minus your allowable expenses. Pension contributions and Gift Aid donations are not business expenses, so you claim them separately. Keep your records for at least five years after the 31 January Self Assessment deadline.

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Sole trader Expenses: Common Questions

Can a sole trader claim working from home expenses?

Yes. Use HMRC’s flat rate (£10, £18 or £26 a month, depending on your hours) or claim a fair business share of your actual household costs.

Can sole traders claim mileage?

Yes. The simplified rates are 55p a mile for the first 10,000 business miles and 25p after that. Motorcycles are 24p a mile. Commuting between home and a regular workplace is not claimable.

Can a sole trader claim food and meals?

Only meals on overnight business trips. Everyday lunches and client entertainment are not allowable.

Can sole traders claim clothes?

Only uniforms and protective clothing. Everyday clothes are not allowable, even if you wear them only for work.

Can I claim a laptop or phone?

You can claim the business share of a phone bill. Under the cash basis, you usually deduct equipment such as a laptop as an expense. Under the accruals basis, you claim capital allowances.

Can I claim expenses and the trading allowance?

No. You use either the £1,000 trading allowance or your actual expenses, not both.

Accurate and comprehensive record-keeping is not just a regulatory requirement; it’s a cornerstone of sound business management. Ensuring that every transaction is accounted for can simplify your accounting processes significantly. For strategies on streamlining your accounting, explore 10 Ways to Successfully Simplify Your Accounting in a Small Business, which offers practical advice to enhance efficiency.