Every Expense You Can Claim as a Sole Trader in 2026

One of the biggest advantages of being a sole trader is the ability to deduct legitimate business expenses from your income before calculating your tax bill. Every pound you claim as an allowable expense reduces your taxable profit — and therefore reduces the Income Tax and National Insurance you owe.

The problem is that many sole traders either do not claim expenses they are entitled to, or they claim things incorrectly and risk questions from HMRC. This guide walks through every category of allowable expense for UK sole traders, with exact amounts where applicable and practical guidance on what HMRC will and will not accept.

The Golden Rule: “Wholly and Exclusively” for Business

Before diving into the categories, understand the fundamental test. For an expense to be allowable, it must be incurred wholly and exclusively for the purposes of your trade. This does not mean you cannot claim expenses that have a personal element — but you must apportion them fairly. If you use your mobile phone 60% for business and 40% personally, you can claim 60% of the cost.

You do not need to send receipts to HMRC with your tax return, but you must keep records for at least five years after the 31 January submission deadline. If HMRC opens an enquiry, you will need to prove your claims.

Office, Premises, and Working From Home

Working From Home — Simplified Expenses (Flat Rate)

If you work from home, the simplest method is to use HMRC’s flat-rate deduction. You do not need to keep receipts for household bills. The rates are:

Hours worked from home per month	Flat rate per month
25 to 50 hours	£10
51 to 100 hours	£18
101 or more hours	£26

Many sole traders who work from home full-time will easily exceed 101 hours per month, giving them a deduction of £26 per month (£312 per year).

Alternatively, if you are an employee who also does some self-employed work, HMRC allows a simpler claim of £6 per week (£312 per year) without needing to track hours. This is often quoted as the “working from home allowance,” though it technically applies to employed people. Sole traders should use the flat-rate table above.

Working From Home — Actual Costs Method

If your actual costs are higher, you can calculate a proportion of your household bills instead. This includes:

Gas and electricity
Council Tax
Water rates
Mortgage interest (not capital repayment) or rent
Home insurance
Broadband and telephone line rental
Repairs and maintenance to the property

You calculate the proportion based on a reasonable method — typically the number of rooms used for business divided by the total number of rooms, multiplied by the time those rooms are used for business. For example, if you use one room out of five exclusively as an office, you can claim 20% of your household running costs.

Important: Be cautious about claiming mortgage interest or rent, as using a room exclusively for business may create a Capital Gains Tax liability when you sell your home. Speak to an accountant if this applies to you.

Office Rent and Business Premises

If you rent a separate office, co-working space, or studio, the full cost is allowable. This includes:

Rent
Business rates
Utility bills for the premises
Buildings and contents insurance
Cleaning and security

Office Equipment and Supplies

Stationery, printer ink, paper
Postage and packaging
Computer peripherals (keyboard, mouse, monitor, cables)
Desk, chair, and office furniture
Printer, scanner

Small items under a few hundred pounds can typically be claimed as revenue expenses in the year of purchase. Larger items may need to be treated as capital expenditure (see Capital Allowances below).

Travel and Transport

Business Mileage — Simplified Expenses

If you use your personal vehicle for business travel, the simplest method is HMRC’s approved mileage rates:

Vehicle type	First 10,000 miles	Above 10,000 miles
Cars and vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

These rates cover fuel, insurance, road tax, MOT, servicing, repairs, and depreciation. You cannot claim these costs separately if you use the mileage method. Keep a mileage log recording the date, destination, purpose, and miles for each business journey.

Business Mileage — Actual Costs Method

Alternatively, you can claim the actual running costs of your vehicle and apportion them based on business versus personal use. This includes fuel, insurance, road tax, MOT, repairs, servicing, and finance costs. You need to keep all receipts and maintain a log of business versus personal mileage. Once you choose a method for a vehicle, you must stick with it for that vehicle.

What Counts as Business Travel?

Travel to client sites and meetings
Travel to suppliers or trade events
Travel between different business premises
Travel to the bank, post office, or stationery shop for business purposes

What does not count: Your regular commute from home to your normal place of work is not a business expense. However, if you work from home and your home is your principal place of business, travel from home to a client site is allowable.

Public Transport and Other Travel Costs

Train, bus, and taxi fares for business journeys
Airfares for business travel
Hotel accommodation for business trips
Meals during overnight business trips (subsistence)
Parking charges and congestion charges on business journeys
Tolls on business journeys

For meals, HMRC expects claims to be reasonable. A sandwich and a coffee during a day trip away from your normal place of work is fine. An extravagant dinner for one with a bottle of wine is likely to be questioned.

Clothing and Uniforms

Clothing is one of the most commonly misunderstood expense categories. The general rule is that everyday clothing is not an allowable expense, even if you only wear it for work. A freelance consultant cannot claim the cost of a suit, even if they only wear it to client meetings.

You can claim:

Protective clothing required for your work (steel-toe boots, high-visibility jackets, hard hats, safety goggles)
Uniforms with a permanent business logo or branding
Costumes for performers
Laundry and cleaning of qualifying work clothing

You cannot claim:

Business suits or smart clothing
Clothing you could reasonably wear outside of work

Staff Costs

If you employ people or use subcontractors, the costs are allowable:

Salaries and wages paid to employees
Employer’s National Insurance contributions
Employer’s pension contributions under auto-enrolment
Subcontractor and freelancer fees (be careful about IR35 and employment status)
Agency fees for temporary staff
Training costs for employees (see Training section below)
Staff benefits such as employer-provided meals, trivial benefits (up to £50 per occasion)

Financial Costs

Bank and Transaction Fees

Business bank account charges
Credit card and debit card merchant fees
PayPal, Stripe, or other payment processor fees
Overdraft interest and charges (on a business account)
Foreign exchange fees on business transactions

Insurance

Professional indemnity insurance
Public liability insurance
Employer’s liability insurance (compulsory if you have employees)
Business contents insurance
Cyber insurance
Business interruption insurance

Accountancy and Professional Fees

Accountant’s fees for preparing your accounts and tax return
Bookkeeper’s fees
Legal fees relating to your business (but not fines or penalties)
Costs of MTD-compatible software subscriptions
Professional body membership fees (if relevant to your trade)

Interest on Business Loans

Interest on loans taken out for business purposes is an allowable expense. The capital repayment is not — only the interest portion.

Marketing and Advertising

Website hosting, domain names, and design costs
Online advertising (Google Ads, Facebook Ads, LinkedIn Ads)
Print advertising in newspapers, magazines, or directories
Business cards and printed marketing materials
Social media management tools
Email marketing software (Mailchimp, ConvertKit, etc.)
Trade show and exhibition fees
PR and marketing agency fees
Photography for business use

Training and Professional Development

HMRC draws a distinction between training that updates existing skills and training that provides entirely new skills. The former is allowable; the latter generally is not.

Allowable:

Courses and conferences that update or enhance skills you already use in your business
Professional journals and trade publications
Books and online subscriptions related to your existing trade
CPD (Continuing Professional Development) required by your professional body

Not allowable:

Training to acquire a new skill or qualification that would allow you to start a different trade
University degree courses (unless directly required for your existing trade)

The distinction can be blurry. A web developer attending a course on a new programming language is updating their existing skills. A plumber taking a course in web development to start a new side business is acquiring new skills. When in doubt, keep records of why the training is relevant to your current trade.

Subscriptions and Software

Software subscriptions used for your business (Adobe Creative Cloud, Microsoft 365, Slack, Zoom, etc.)
Cloud storage (Google Drive, Dropbox, iCloud for business use)
Trade and professional body subscriptions
Journals, magazines, and newspapers relevant to your trade (apportioned if partly personal)

Bad Debts

If a customer fails to pay an invoice and you have exhausted reasonable efforts to collect the debt, you can write off the bad debt as an allowable expense. You must be able to demonstrate that the debt is genuinely irrecoverable.

Capital Allowances

Capital allowances let you deduct the cost of significant business assets from your profits. Rather than claiming the full cost in the year of purchase, capital allowances spread the deduction over the asset’s useful life — though generous allowances often let you claim the full amount upfront.

Annual Investment Allowance (AIA)

The AIA lets you claim 100% of the cost of qualifying plant and machinery in the year of purchase, up to £1,000,000 per year. For most sole traders, this limit is more than sufficient to cover all capital purchases. Qualifying items include:

Computers and laptops
Vehicles (but see below for restrictions on cars)
Tools and equipment
Machinery
Office furniture (desks, chairs, shelving)

Cars

Cars have special rules. You cannot claim cars under the AIA. Instead, you claim capital allowances at the following writing-down rates:

CO2 emissions of 0 g/km (electric cars): 100% first-year allowance
CO2 emissions of 50 g/km or less: 18% writing-down allowance per year
CO2 emissions above 50 g/km: 6% writing-down allowance per year

If you use the simplified mileage method for running costs, you cannot also claim capital allowances on the vehicle.

Simplified Expenses — Summary

HMRC offers simplified expenses to reduce the record-keeping burden for sole traders. The three main areas are:

Expense	Simplified rate	Notes
Working from home	£10–£26/month based on hours	No receipts needed for household bills
Business mileage	45p/mile (first 10,000), 25p/mile thereafter	Covers all vehicle running costs
Living at your business premises	£350–£650/month based on occupants	For those who live and work at the same premises

You can choose simplified expenses for some categories and actual costs for others — you do not have to use them for everything.

Expenses You Cannot Claim

To avoid problems with HMRC, be clear on what is never allowable:

Personal expenses — groceries, personal clothing, personal phone bills (unless apportioned)
Fines and penalties — parking tickets, HMRC penalties, court fines
Client entertaining — taking clients out for meals or events is not allowable (this is a common misconception)
Political donations
Your own drawings — money you take out of the business for personal use is not an expense

The client entertaining rule surprises many sole traders. While staff entertaining (such as a Christmas party) can be allowable, taking a client to lunch or to a sporting event is specifically disallowed by HMRC.

Record-Keeping Best Practices

Use accounting software. With MTD for Income Tax arriving in April 2026, digital record-keeping is becoming mandatory for many sole traders. Get ahead of the curve.
Photograph receipts immediately. Use your phone or accounting app to capture receipts when you get them. Paper fades.
Record the business purpose. For each expense, note why it was incurred. “Client meeting in Manchester” is more useful than just “train ticket.”
Separate business and personal. A dedicated business bank account makes expense tracking dramatically easier.
Keep records for five years after the 31 January filing deadline for the relevant tax year.
Review monthly. Do not leave expense tracking to the end of the year. Monthly reviews catch errors early and save time at tax return season.

The Bottom Line

Claiming all your legitimate business expenses is not aggressive tax planning — it is simply paying the right amount of tax. The expenses listed above can add up to thousands of pounds in tax savings each year. A sole trader working from home with a car, a laptop, some software subscriptions, and an accountant could easily claim £5,000 to £10,000 or more in expenses annually.

The key is to be honest, keep records, and understand the rules. If in doubt, ask your accountant or check HMRC’s guidance on GOV.UK. An unclaimed expense is money left on the table.

This article was last updated on 16 February 2026. Tax rules and HMRC rates are subject to change. Always verify current rates on GOV.UK or consult a qualified tax adviser.