Calibra Accountancy

Allowable expenses for sole traders: the full UK list

A comprehensive UK list of allowable expenses for sole traders in 2025/26: what you can and cannot claim, with practical examples that cut your tax bill.

Allowable expenses are the costs HMRC lets you deduct from your turnover before working out your tax. They are the single biggest lever a sole trader has for cutting a tax bill legally.

The rule is simple: an expense is allowable if it is wholly and exclusively for the business. Something with mixed personal and business use (car, phone, home) needs to be apportioned.

Here is the working list, in the categories HMRC uses.

Office and admin

  • Rent, rates, light, heat and power for business premises.
  • Property insurance for business premises.
  • Stationery, printing, postage, courier fees.
  • Phone, mobile, internet and broadband (business-use portion).
  • Software subscriptions (Xero, QuickBooks, Adobe, Microsoft 365, Zoom, Slack, etc.).
  • Website and email hosting.
  • Bank charges on the business account.
  • Professional subscriptions to HMRC-approved bodies (ACCA, ICAEW, RIBA, etc.).

Travel and vehicles

You can claim actual costs (fuel, servicing, insurance, MOT) apportioned by business mileage, or use HMRC simplified mileage rates:

  • 45p per mile for the first 10,000 business miles
  • 25p per mile thereafter
  • 20p per mile on a bike

Also claimable:

  • Train, bus, taxi and flight fares for business trips.
  • Hotel and reasonable subsistence on overnight trips.
  • Parking and congestion charges (not fines).
  • Vehicle hire.

Not claimable: commuting from home to your normal place of work, or ordinary personal travel.

Working from home

Two options:

  1. HMRC flat rate (simplified expenses):
    • 25-50 hours a month: £10/month
    • 51-100 hours: £18/month
    • 101+ hours: £26/month
  2. Actual costs apportioned by number of rooms used and time spent. Usually claims more, needs more record-keeping.

We built a WFH tax calculator that runs both methods and shows the tax saved.

Stock and materials

  • Cost of goods bought for resale.
  • Raw materials used in your products.
  • Direct production costs.

Staff and subcontractors

  • Wages, salaries, bonuses and pensions for staff.
  • Employer's National Insurance contributions.
  • Employer's pension contributions.
  • Subcontractor costs (CIS deductions handled separately if in construction).
  • Recruitment agency fees.

Marketing and PR

  • Advertising in newspapers, magazines, online, or on social media.
  • Website design, development and hosting.
  • Free samples given to potential customers.
  • Direct mail costs and mailing lists.
  • Attending trade shows and conferences (fees, travel, accommodation).

Not claimable: client entertaining. HMRC blocks this entirely.

Legal and professional fees

  • Accountants, bookkeepers and tax advisers.
  • Solicitors, surveyors and architects for business work.
  • Business insurance (public liability, professional indemnity, employer's liability).
  • Professional training that maintains or updates existing skills.

Not claimable: training that gains a new qualification unrelated to your existing trade.

Financial costs

  • Interest on business loans and overdrafts.
  • Hire purchase interest on business assets.
  • Credit card charges on business spending.
  • Leasing costs on business equipment.

Repairs and equipment

  • Repairs to business premises and equipment (not improvements).
  • Small tools and equipment.
  • Replacement of worn-out items.

Larger equipment (laptops, machinery, vehicles) usually goes through capital allowances rather than direct expense - almost always via the Annual Investment Allowance which lets you deduct 100% of the cost in the year of purchase, up to £1 million.

The most missed expenses

Sole traders regularly forget:

  • Use of home (see above - even the £10-£26/month flat rate is worth claiming).
  • Mileage for short local trips between clients, suppliers, and the bank.
  • Software subscriptions that renew personally but are used for work.
  • Phone and internet proportion (usually 30-50% business).
  • Bank charges on the business account.
  • Training and books that maintain existing skills.
  • Small tools under the trivial threshold.

What you cannot claim

  • Personal travel, food and clothing (except protective/uniform).
  • Client entertaining.
  • Gym memberships (unless a specific trade requires it).
  • Fines and penalties.
  • Political donations.
  • Anything with no business purpose.

Record-keeping

You need a record of every expense: receipt, invoice, or bank statement showing the transaction. Digital records are fine (and required if you are on MTD for Income Tax). Apps like Dext or Hubdoc capture receipts via phone photo and file them automatically.

Keep records for at least 5 years after the 31 January submission deadline for that tax year.

If in doubt

If an expense feels borderline, ask an accountant before you claim. Getting it wrong is not fraud, but it can trigger a compliance check that costs far more time than it was worth.

If you would like us to run a review of what you are (and are not) claiming, get in touch or take a look at our self assessment service.

Frequently asked questions

What is the rule for allowable expenses?
An expense is allowable if it is incurred wholly and exclusively for the business. Costs with a mix of personal and business use, such as phone, car or home, can still be claimed as long as you apportion them fairly.
Can I claim for working from home as a sole trader?
Yes. Either use HMRC's simplified flat rate of £10 to £26 a month depending on hours worked, or claim actual costs apportioned by room and time. Actual costs usually give a bigger claim if you have a dedicated workspace.
Can I claim mileage as a sole trader?
Yes. The simplified rate is 45p per mile for the first 10,000 business miles in the tax year and 25p per mile thereafter. It covers fuel, servicing, insurance and depreciation. You can't also claim actual car running costs if you use the mileage rate.
Can I claim client entertaining as an expense?
No. HMRC blocks client entertaining entirely, whether you're a sole trader or a limited company. Staff entertaining up to £150 a head is allowable if the event is annual and open to all employees.
Do I need receipts for every expense?
Yes. HMRC expects a receipt, invoice, or bank statement for every expense claimed. Digital records are fine and are required once you're in scope for Making Tax Digital for Income Tax. Keep records for at least 5 years after the 31 January filing deadline.