Allowable expenses for UK sole traders (2026)

The rule that governs everything: wholly & exclusively

An expense is allowable only if it was incurred wholly and exclusively for your business. If a cost is purely business, it's claimable. If it's purely personal, it isn't. If it's both (a phone you also use personally, a car used for business and private trips), you can usually claim the identifiable business proportion, but you need a reasonable, honest basis for that split, and evidence to back it.

Common allowable categories

• Office & admin: stationery, software subscriptions, postage, business phone and internet (business share).
• Business travel: mileage or actual vehicle costs for business journeys, train/bus fares, parking, but not ordinary commuting.
• Working from home: a reasonable proportion of household costs, or the simplified flat rate (below).
• Insurance & professional fees: business insurance, accountant fees, relevant subscriptions.
• Stock & materials: goods for resale, raw materials, direct costs of what you sell.
• Marketing: website, advertising, business cards.

Commonly refused (the ones that catch people out)

• Everyday clothing, even if you only wear it for work. (Genuine protective gear or a branded uniform is different.)
• Ordinary commuting to a regular place of work.
• Client entertaining, generally not allowable for tax.
• Fines and penalties, e.g. parking or speeding fines.
• Purely personal costs dressed up as business, a fast route to trouble in an enquiry.

Simplified (flat-rate) expenses

HMRC lets you use optional flat rates instead of working out actual costs: a set rate per business mile for vehicles, and a flat monthly amount for working from home based on the hours you work there. They cut the admin, but they aren't always the bigger claim. Do a quick comparison against actual costs, especially if you drive a lot or have significant home-working costs. Rates change, so confirm the current figures on GOV.UK.

For the working-from-home flat rate specifically, our free working from home flat-rate calculator turns your typical hours into the £10, £18 or £26 monthly amount and an annual figure. For vehicles, our self-employed mileage calculator works out the approved amount at the 55p and 25p rates (the car/van first-10,000-mile rate rose to 55p for 2026/27).

For every current UK figure a sole trader touches, allowances, rates, thresholds, each with its GOV.UK source and the date we checked it, see our UK rates & thresholds reference.

Evidence to keep for every claim

A claim is only as good as the evidence behind it. For each cost, keep the receipt or invoice, the date and amount, what it was for, and, for anything part-personal, a note of how you worked out the business proportion. Under Making Tax Digital these records must be kept digitally. Our records guide and MTD checklist cover how to keep this clean, and our receipt-scanning apps shortlist covers digitising the receipts themselves.

When to ask an accountant

Straightforward expenses you can handle yourself. But for bigger judgement calls, capital vs revenue, use-of-home splits, mixed-use assets, or anything an HMRC enquiry might question, a quick accountant check can pay for itself. Not sure whether you need one? See accountant vs accounting software. To see how expenses feed your tax, the take-home calculator works from profit (income after allowable expenses).

FAQ

What expenses can a UK sole trader claim?

You can claim costs incurred wholly and exclusively for your business, common categories include office costs, business travel, a portion of phone and internet, business insurance, stock and materials, and professional fees. Personal or dual-purpose costs generally aren't allowable unless you can separate the business share.

What is the wholly and exclusively rule?

HMRC only allows a cost if it was incurred wholly and exclusively for the purposes of your trade. If something is part personal and part business (like a phone), you can usually claim the identifiable business proportion, but not the personal part.

What expenses are not allowable?

Common refusals include ordinary commuting to a regular workplace, everyday clothing (even if you only wear it for work), client entertaining, and fines. Everyday clothing and normal commuting are the two that catch people out most.

What are simplified expenses?

Simplified expenses are optional HMRC flat rates you can use instead of working out actual costs, for example a flat rate per business mile, or a flat monthly amount for working from home based on hours. They can save admin, but check whether actual costs would give you a bigger claim.

What records do I need to keep for expenses?

Keep evidence for every claim, receipts or invoices, the date, amount, and what it was for, plus a note of the business proportion for anything part-personal. Under Making Tax Digital these records need to be digital.