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Self-employed · 7 min read

Allowable expenses for sole traders

What you can claim to reduce your tax bill — and the common mistakes that get people caught out.

Every pound you claim as an allowable expense reduces the profit you pay tax on. Claim too little and you overpay; claim the wrong things and you risk a problem with HMRC. Here's how to get it right.

The golden rule

An expense is allowable if it's incurred “wholly and exclusively” for your business. If something is part-business, part-personal (like your phone or car), you can usually claim the business proportion only.

Expenses you can usually claim

  • Office costs — stationery, postage, printing, phone and internet (business use), software subscriptions.
  • Working from home — a proportion of heat, light and broadband, or HMRC's simplified flat rate.
  • Travel — mileage (55p/mile for the first 10,000 miles from 6 April 2026, then 25p), public transport, parking, business accommodation. Not your commute.
  • Stock & materials — goods for resale and raw materials.
  • Staff & subcontractors — wages, subcontractor costs, employer's NI.
  • Premises — rent, business rates, utilities and insurance for business premises.
  • Marketing — website, advertising, and the cost of free samples.
  • Professional fees — accountancy, and many business insurances and bank charges.
  • Training — courses that update skills for your existing trade.

What you can't claim

  • Everyday clothing (even if you only wear it for work) — uniforms and protective kit are fine.
  • Client entertaining.
  • Your own wages or drawings, or personal expenses.
  • Fines and penalties.
  • The personal portion of any mixed-use cost.
Keep the receipt. HMRC can ask you to evidence any expense, and under Making Tax Digital you'll need to keep these records digitally anyway. More on MTD →

Simplified vs actual costs

For things like working from home and vehicle use, HMRC lets you use simplified flat rates instead of working out the exact business proportion. Whichever gives the bigger, justifiable claim is usually the one to use — good software will compare both for you.

Make it effortless

The hardest part of expenses isn't the rules — it's remembering to log them. With Basetax you can record expenses as you go, connect your bank, and watch your estimated tax fall in real time, so nothing slips through the cracks at year end.

Track every expense, automatically

Log expenses, connect your bank, and see your tax drop live. Free to start.

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This guide is general information, not personal tax advice. Rules and rates can change — ask our team about your situation.