UK Sole Trader Expenses: The Complete HMRC List (2026)

Claiming allowable expenses is one of the most effective ways to reduce your tax bill as a sole trader. Every pound you legitimately claim as a business expense reduces your taxable profit by a pound — which means less income tax and less Class 4 National Insurance to pay.

This guide covers every expense category HMRC allows, including the ones many sole traders miss or get wrong.

The golden rule: wholly and exclusively for business

HMRC permits deductions for expenses that are "wholly and exclusively" incurred for business purposes. If an expense has both a personal and a business element, you can usually claim only the business proportion.

For example, if your mobile phone is used 70% for work and 30% personally, you can claim 70% of the contract cost. The same proportional approach applies to home broadband, home running costs, and any other dual-use expense.

Office costs

Working from home: If you work from home, you can claim a proportion of your household running costs — heating, electricity, broadband, and in some cases rent or mortgage interest.

If you prefer to claim actual costs, divide your total household running costs by the number of rooms and claim the rooms used exclusively for work. For a five-room home where one room is used solely as an office, you can claim one fifth of relevant costs.

Dedicated office space: If you rent a separate office or workspace, the full rental cost is claimable.

Travel costs for sole traders

Travel to client sites, meetings, and other business locations is claimable. Rather than tracking actual fuel and maintenance costs, HMRC allows a simplified mileage rate:

• Car: 45p per mile for the first 10,000 business miles, then 25p per mile after that
• Motorbike: 24p per mile
• Bicycle: 20p per mile

Public transport fares, taxis, and parking costs for business journeys are also claimable. Keep receipts and a note of the business purpose for each journey.

Not claimable: Travel between your home and a regular, fixed place of work counts as commuting and is not an allowable expense.

Equipment and technology

Computers, phones, cameras, tools, and other equipment used in your business are claimable. If an item is also used for personal purposes, claim only the business proportion.

Under the Annual Investment Allowance, you can deduct the full cost of qualifying equipment in the year of purchase rather than spreading the deduction over several years. This applies to most business equipment.

Phone and internet

Business calls and the business proportion of your broadband are claimable. If a single phone or broadband contract covers both personal and work use, calculate the percentage used for business and claim accordingly. Most sole traders working regularly from home claim 50–80%.

Professional fees and subscriptions

Accountant and bookkeeper fees, solicitor fees for business matters, professional membership fees relevant to your trade, and annual subscriptions to accounting software for sole traders are all claimable.

This category is often underused. If you pay for software that helps you run your business — invoicing tools, project management apps, or industry-specific applications — those costs belong here.

Marketing and advertising

Allowable marketing and advertising expenses include:

• Website costs — hosting, domain registration, and web design
• Online advertising (Google Ads, social media advertising)
• Business cards, brochures, and printed promotional materials
• Photography commissioned for business purposes

Staff costs and subcontractors

If you employ staff or use subcontractors, their wages, salaries, and employer National Insurance contributions are claimable. Keep payslips, contracts, and payment records.

Training and development

Training that updates or improves skills you already use in your business is claimable. Books, online courses, and conference tickets related to your current trade also qualify.

Training to learn a completely new trade or profession is generally not claimable — HMRC's test is whether the training relates to your existing source of income, not a new one you are starting.

Financial costs

The following financial costs are claimable:

• Bank charges on your business bank account
• Interest on business loans
• Business insurance — professional indemnity, public liability, and similar policies

Personal bank account fees, personal loan interest, and any financial costs unrelated to your business are not claimable.

What sole traders cannot claim

Several common expenses are not deductible for income tax purposes, despite what many people assume:

Food and entertainment: The "wholly and exclusively" rule almost always disallows meals and client entertainment. The limited exception is reasonable meal costs when you are travelling overnight away from your normal place of business on a trip that would not otherwise occur. Client lunches and team social events are not claimable.

Clothing: Work clothing is only claimable if it is a uniform, protective clothing, or a costume you could not wear in everyday life. A suit worn to client meetings is not claimable, even if you bought it specifically for work.

Commuting: Travel between your home and a fixed, regular place of work is a personal expense and cannot be claimed.

Keeping your sole trader expense records

HMRC requires you to keep records of all business expenses for at least 5 years after the Self Assessment filing deadline for that tax year. Digital records — photos of receipts, bank statements, or accounting software exports — are acceptable and encouraged.

Staying on top of the records you need to keep matters even more once Making Tax Digital applies to you. MTD requires digital record keeping from April 2026 for sole traders earning over £50,000. Check whether MTD applies to you if you are unsure of your position.

Using accounting software to capture expenses as you go — rather than reconstructing records at the end of the year — reduces the time you spend at tax return time and the risk of missing claimable costs. FreeAgent, Xero, QuickBooks, and Sage all support automatic expense categorisation with bank feeds.

If you have recently started trading, make sure you have registered for Self Assessment with HMRC before worrying about which expenses to claim.