What Expenses Can You Claim as a Sole Trader? A Plain-English Guide

A sole trader can claim any cost that is incurred wholly and exclusively for business, including stock, tools, travel, a proportion of home and vehicle costs, and professional fees. Claiming every allowable expense you are entitled to directly reduces your taxable profit, so understanding the rules on allowable expenses self-employed UK 2026 is one of the simplest ways to lower your tax bill legitimately. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, helps sole traders capture every deduction HMRC permits without straying into costs that will be disallowed. This article explains the wholly and exclusively rule, the main categories of sole trader expenses HMRC accepts, the ones people most often miss, and how good records protect your claim, especially now that Making Tax Digital applies to many sole traders.

Key Takeaways

• An allowable expense for a sole trader is any cost incurred wholly and exclusively for the purposes of the trade, deductible from taxable profit.
• Common allowable expenses include stock, equipment, business travel, use of home, phone and broadband, insurance, and accountancy fees.
• The simplified home-working flat rate for 2026/27 is £10 per month for 25 to 50 hours, £18 for 51 to 100 hours, and £26 for 101 or more hours worked from home each month.
• The mileage flat rate is 55p per business mile for the first 10,000 miles in a tax year and 25p per mile thereafter.
• Costs with a private element, such as everyday clothing, client entertaining, or fines, are not allowable and cannot be deducted.
• 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 allowable expense is a cost incurred wholly and exclusively for the purposes of your trade, and it is deducted from your income to arrive at taxable profit. The phrase "wholly and exclusively" comes directly from HMRC guidance and is the test every expense must pass. If a cost is purely for the business, it is deductible in full; if it serves both business and private purposes, only a clearly identifiable business proportion can be claimed.

For example, a £600 laptop used only for your business is fully allowable, while a mobile phone used for both work and personal calls is claimed only on the business share. Working out what you can self-employed claim comes down to this single principle. For a complete overview of the rules and every category in detail, see our guide to allowable expenses for the self-employed.

Which everyday business costs can the self-employed claim?

The self-employed can claim the everyday running costs of the business, including stock, materials, tools, staff wages, business insurance, marketing, and professional fees. These are the routine sole trader expenses HMRC expects to see and rarely queries when they are genuinely business-related. Office costs such as stationery, software subscriptions, and postage are allowable, as are bank charges and interest on a business loan.

Professional fees, including accountancy and legal costs relating to the trade, are deductible, along with the cost of business insurance policies. Travel for business, such as visiting clients or suppliers, is allowable, but ordinary commuting from home to a regular workplace is not. Keeping these categories clearly separated from personal spending is the practical key to a clean, defensible claim.

How do you claim home and vehicle costs as a sole trader?

Home and vehicle costs are claimed either using HMRC's simplified flat rates or by apportioning actual costs to the business share. For working from home, the simplified flat rate for 2026/27 is £10 per month if you work 25 to 50 hours from home, £18 for 51 to 100 hours, and £26 for 101 hours or more. Alternatively, you can claim a fair proportion of actual household costs such as heating, electricity, and broadband based on rooms used and time spent.

For vehicles, the simplified mileage rate is 55p per business mile for the first 10,000 miles in the tax year and 25p thereafter, which covers fuel, servicing, insurance, and depreciation. The alternative is to claim the business proportion of actual running costs plus capital allowances. A sole trader driving 12,000 business miles can claim £6,000, being 10,000 miles at 55p (£5,500) plus 2,000 miles at 25p (£500).

Which allowable expenses do sole traders most often miss?

Sole traders most often miss use of home, a share of phone and broadband, professional subscriptions, bank and finance charges, and training that maintains existing skills. Many self-employed people record only their obvious purchases and overlook the smaller recurring costs that add up across a year. A portion of your mobile phone bill, your business broadband use, and trade or professional body memberships are all commonly forgotten.

Consider a freelancer with £2,000 of overlooked costs a year: £312 use of home, £400 phone and broadband, £250 professional subscriptions, £600 software, and £438 of bank and finance charges. A basic-rate taxpayer paying 20% income tax plus 6% Class 4 National Insurance would save £520 by claiming them. Capturing these smaller items is where careful bookkeeping quietly pays for itself.

Every one of these claims is made through the annual return, and our guide to completing a self-assessment tax return shows where each figure belongs.

Why do good records matter under Making Tax Digital?

Good records matter because you can only claim an expense you can evidence, and from 6 April 2026 many sole traders must keep those records digitally. Under Making Tax Digital for Income Tax, sole traders with qualifying income above £50,000 must maintain digital records and submit quarterly updates to HMRC, followed by a final declaration by 31 January. Those with income above £30,000 join from April 2027, and above £20,000 from April 2028.

Even if your income is below £50,000 and the rules do not yet apply to you, keeping digital records of receipts and mileage makes claiming easier and protects you if HMRC asks questions. Retain records for at least five years after the 31 January filing deadline. Sound record-keeping turns a list of purchases into a claim you can stand behind.

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, tools, equipment, business travel, a share of home and phone costs, insurance, marketing, and accountancy fees. Costs that serve both business and private purposes can only be claimed on the business proportion, and purely personal spending is never allowable.

Can I claim for working from home as a sole trader?

Yes, you can claim for working from home as a sole trader using HMRC's simplified flat rate or a share of actual costs. The 2026/27 flat rate is £10 per month for 25 to 50 hours worked at home, £18 for 51 to 100 hours, and £26 for 101 hours or more. The flat rate does not cover phone or internet, which are claimed separately.

Can I claim mileage as a sole trader?

Yes, you can claim mileage as a sole trader at HMRC's approved rate of 55p per business mile for the first 10,000 miles in the tax year and 25p per mile after that. The rate covers fuel, insurance, servicing, and wear. You cannot also claim actual running costs or capital allowances on the same vehicle if you use the mileage rate.

What expenses are not allowable for the self-employed?

Expenses that are not allowable for the self-employed include everyday clothing, client entertaining, personal spending, fines and penalties, and the private share of any mixed-use cost. Ordinary commuting from home to a regular workplace is also disallowed. Any cost that fails HMRC's wholly and exclusively test, because it has a private purpose, cannot be deducted from your taxable profit.

Do I need to keep digital records of my expenses?

You need to keep digital records if you are a sole trader with qualifying income above £50,000, as Making Tax Digital for Income Tax applies to you from 6 April 2026. Those with income above £30,000 join from April 2027 and above £20,000 from April 2028. Below these thresholds, digital records are sensible but not yet mandatory.

How Blue Tick Can Help

Blue Tick Accountants helps sole traders identify every allowable expense they are entitled to claim, so no legitimate deduction is missed and no disallowable cost creates a problem later. As specialists in self-employed tax, Blue Tick Accountants also sets up Making Tax Digital compliant record-keeping so your quarterly updates are straightforward. Head to our website and book a meeting now.

Conclusion

Claiming the right expenses is one of the most effective ways for a sole trader to reduce a tax bill legitimately, and the guiding principle is simple: a cost must be incurred wholly and exclusively for the business. Capture the everyday costs, apportion home and vehicle use fairly, and do not overlook the smaller recurring items that quietly add up. With Making Tax Digital now live for higher earners, keeping clear digital records is the surest way to protect every claim you make.

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 the self-employed, landlords and limited company owners across the UK claim the right expenses and stay compliant. 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.