⚡ Quick Answer
Sole traders can claim any expense incurred “wholly and exclusively” for business purposes against taxable profit. Common allowable expenses: business equipment and tools; business travel (not commuting); the business proportion of phone, internet, and home working costs; professional subscriptions and insurance; accountancy fees; software and subscriptions used for work; marketing costs; and bank charges. Personal expenses are never claimable. Mixed-use items (phone used 60% for business) can be claimed in the business proportion only.
Claiming allowable expenses reduces your taxable profit, which directly reduces income tax and National Insurance. Many sole traders under-claim — either through uncertainty about what qualifies or through inadequate record-keeping. Knowing the rules clearly can save hundreds or thousands of pounds annually.
The Core Test: “Wholly and Exclusively”
HMRC’s fundamental test: an expense must be incurred “wholly and exclusively” for the purposes of your trade. This means:
- Purely business: 100% deductible
- Purely personal: 0% deductible (even if loosely connected to work)
- Mixed business and personal: deductible only in the business proportion
Key Categories of Allowable Expenses
Equipment and Tools
Computers, laptops, printers, cameras, specialist tools and equipment — claimed through capital allowances or the Annual Investment Allowance (which allows 100% deduction in the year of purchase for most small businesses). Equipment used partly personally is partially deductible in the business proportion.
Business Travel
Mileage for business journeys: 45p/mile for the first 10,000 miles; 25p/mile thereafter (2026/27 rates). Parking, public transport for business trips, overnight accommodation for business travel. Commuting — travel from home to a regular workplace — is never deductible.
Home Working Costs
HMRC’s simplified flat rate: £10/month (25-50 hours working from home), £18/month (51-100 hours), £26/month (101+ hours). Alternatively, calculate actual proportion of home costs — useful if actual costs exceed the flat rate.
Phone and Internet
The business proportion of mobile phone and broadband bills. If you use your phone 65% for business, claim 65% of the bill.
Professional Costs
- Accountant and bookkeeper fees — fully deductible
- Professional indemnity and public liability insurance — fully deductible
- Trade body memberships and professional subscriptions relevant to your work
- Relevant professional development and training (must maintain existing skills, not provide a new qualification enabling a completely new trade)
Software and Digital Services
Accounting software (FreeAgent, QuickBooks, Xero), project management tools, design software, and similar direct business subscriptions are deductible. Personal subscriptions are not.
Marketing and Advertising
Website costs, paid advertising, business cards, marketing materials, professional photography — all deductible.
What You Cannot Claim
- Client entertaining: meals, drinks, event tickets for clients — not deductible under HMRC rules
- Regular clothing: even if only worn for work (exception: uniforms, protective clothing, or clothing with company branding)
- Fines and penalties: never deductible
- Personal costs labelled as business: HMRC scrutinises this in investigations
For how to handle home working costs specifically — including the rules that changed in April 2026 — see our guide on claiming work-from-home tax relief.
Frequently Asked Questions
Can I claim expenses before my business started?
Pre-trading expenses — costs incurred in preparing to start the business (market research, initial equipment, professional advice) — can usually be claimed as if incurred on the first day of trading.
What records do I need?
HMRC requires you to keep records for at least 5 years after the 31 January filing deadline for the relevant return. Include receipts, invoices, bank statements, and mileage logs. Digital records (photos of receipts, accounting software) are acceptable.
For the official list with HMRC examples, HMRC’s self-employed expenses guidance is authoritative and comprehensive.
