Self-Employed Expenses Checklist: Are You Claiming Everything You're Entitled To?

A self-employed person can claim any cost that is incurred wholly and exclusively for the purposes of the business, and doing so reduces taxable profit pound for pound. Knowing the full range of allowable expenses self-employed UK sole traders are entitled to in 2026/27 is the single easiest way to cut a tax bill legally, yet most sole traders miss several deductions every year. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, sees the same overlooked costs again and again, from a proportion of home running costs to bank charges and professional subscriptions. This article is a practical checklist of what you can claim, the one rule that governs every deduction, and the expenses sole traders most often leave on the table. It reflects the rules for the 2026/27 tax year, including the new Making Tax Digital record-keeping obligations now in force.

Key Takeaways

• An allowable expense for a sole trader is any cost incurred wholly and exclusively for the business, deducted from turnover to arrive at taxable profit.
• Common allowable expenses include stock, office costs, business travel, professional fees, insurance, marketing, bank charges and a fair proportion of home working costs.
• The wholly and exclusively rule means costs with a private element must be apportioned; only the business share is deductible.
• Sole traders can use HMRC simplified expenses, claiming 55p per mile for the first 10,000 business miles and a flat monthly rate for working from home.
• The £1,000 trading allowance gives tax-free income, but a sole trader who claims it cannot also deduct actual expenses.
• From 6 April 2026, sole traders with qualifying income above £50,000 must keep digital records and file quarterly updates under Making Tax Digital for Income Tax.

What counts as an allowable expense for a sole trader?

An expense is allowable if it is incurred wholly and exclusively for the purposes of the trade, and this test governs every deduction on a self-assessment tax return. HMRC accepts the everyday running costs of a business without difficulty, provided they are genuinely for business use.

The core categories sole trader expenses HMRC will accept include: stock and raw materials; office costs such as stationery, postage and software; business premises costs including rent, utilities and business rates; travel and motoring for business journeys; staff wages and subcontractor costs; advertising and marketing; professional and legal fees; accountancy fees; business insurance; bank, overdraft and card processing charges; and interest on business loans. Training that maintains or updates existing skills is also allowable, though the cost of acquiring a new skill or qualification is not.

For a fuller treatment of every category and the case law behind it, see our guide to allowable expenses for the self-employed.

How does the wholly and exclusively rule work?

The wholly and exclusively rule means a cost is only deductible to the extent it serves the business, so any expense with a private element must be apportioned on a just and reasonable basis. This is the rule that decides what can self-employed workers actually claim in practice.

A mobile phone used 70% for business and 30% privately allows 70% of the bill to be claimed. A car used for both business and personal trips is apportioned by mileage. A room used as an office part of the day is apportioned by floor area and time. HMRC does not expect perfection, but it does expect a reasonable method that you can explain and support with records.

Purely private costs never qualify, including ordinary commuting, everyday clothing (even if bought for work), and client entertaining, which is specifically disallowed. Protective clothing and genuine uniforms carrying a business logo are the exception and remain allowable.

Which self-employed expenses are most often missed?

The most commonly missed allowable expenses are use-of-home costs, mileage, bank and finance charges, and professional subscriptions. These are legitimate deductions that sole traders routinely forget, and together they can amount to hundreds of pounds a year.

Use of home is the biggest one. If you work from home, you can either claim a fair proportion of actual costs (rent or mortgage interest, council tax, heating, electricity, broadband) or use HMRC simplified expenses: a flat £10 per month for 25 to 50 hours of home working, £18 for 51 to 100 hours, and £26 for 101 or more hours per month. Other frequently missed costs include trade body and professional subscriptions, software and cloud subscriptions, business use of a personal phone and broadband, protective clothing, and the cost of business banking.

Worked example: what a full claim is worth

A worked example shows why a complete expenses claim matters. Consider Priya, a self-employed graphic designer with turnover of £48,000 in 2026/27.

Her allowable expenses are: design software £600, laptop and equipment £900, professional subscriptions £250, business insurance £300, accountancy fees £700, use of home at £26 per month (£312), and business mileage of 2,400 miles at 55p (£1,320). Her total allowable expenses come to £4,382.

Without claiming these, Priya would be taxed on £48,000. After deducting expenses, her taxable profit falls to £43,618. That sits inside the basic rate band, so the deductions save income tax at 20% plus Class 4 National Insurance at 6%, and the full £4,382 claim is worth £1,139 to her. Missing even a few hundred pounds of legitimate costs is money given away.

Frequently Asked Questions

What expenses can I claim as a self-employed sole trader?

You can claim any cost incurred wholly and exclusively for your business, including stock, office and software costs, business travel and mileage, professional and accountancy fees, insurance, marketing, bank charges, and a fair proportion of home working costs. Purely private costs, ordinary commuting and client entertaining cannot be claimed.

Can I claim working from home as a self-employed person?

Yes. A self-employed person working from home can claim a fair proportion of actual household running costs, or use HMRC simplified expenses of £10, £18 or £26 per month depending on hours worked. The flat rate covers heating, electricity and broadband but not the business proportion of telephone or internet used solely for work.

What is the £1,000 trading allowance?

The trading allowance lets a self-employed person earn £1,000 of gross trading income tax-free without deducting expenses or, in most cases, filing a return. If your income exceeds £1,000 you can either deduct the £1,000 allowance instead of actual expenses, or claim actual expenses, whichever gives the lower taxable profit. You cannot do both.

Do I need to keep receipts for my expenses?

Yes. HMRC requires you to keep records supporting every expense claimed, normally for at least five years after the 31 January filing deadline. From 6 April 2026, sole traders with qualifying income above £50,000 must keep those records digitally and file quarterly updates under Making Tax Digital for Income Tax.

Can I claim expenses I paid before I started trading?

Yes. Pre-trading expenses incurred in the seven years before your business started, such as equipment, stock or professional fees, can be claimed as if incurred on the first day of trading, provided they would have been allowable had the business already begun.

How Blue Tick Can Help

Blue Tick Accountants helps sole traders across the UK identify every allowable expense they are entitled to claim and keep compliant digital records under Making Tax Digital for Income Tax. A short review of your costs often uncovers deductions worth far more than the fee, and gives you confidence that your return will stand up to any HMRC scrutiny. Head to our website and book a meeting now.

Conclusion

Every legitimate business cost you claim reduces your taxable profit and your tax bill, so the goal is a complete and accurate claim, not an aggressive one. Focus first on the expenses sole traders most often miss: use of home, mileage, subscriptions and bank charges. Keep clear digital records throughout the year, apply the wholly and exclusively test honestly, and you will pay the right amount of tax and no more.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps self-employed sole traders, landlords and limited company owners across the UK. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

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