Sole Trader Expenses: What You Can (and Can't) Claim

Every pound of allowable expense you claim reduces your taxable profit — and therefore your tax bill. Yet many sole traders quietly overpay simply because they don’t know what they’re allowed to claim. Here’s a plain-English guide to sole trader expenses.

The golden rule

To be an allowable expense, a cost must be “wholly and exclusively” for your business. If something is part-business and part-personal (like your phone or car), you can only claim the business proportion.

Get this right and you pay tax only on your real profit. Get it wrong — by claiming too little — and you hand HMRC money you didn’t owe.

Expenses you can usually claim

• Business travel — train, bus, taxi, parking, and mileage for business journeys (not your normal commute)
• Use of home — a fair share of your household costs if you work from home, or HMRC’s simplified flat rate
• Equipment and tools — laptops, machinery, tools of your trade
• Phone and internet — the business proportion
• Software and subscriptions — accounting software, design tools, professional memberships
• Stock and materials — what you buy to make or sell your product
• Professional fees — accountancy, legal and certain consultancy costs
• Marketing — website, advertising, business cards
• Training — courses that maintain or update skills for your existing trade
• Insurance — public liability, professional indemnity, business cover

Working from home and your car

These two trip people up most, because they’re part-personal:

• Home: use HMRC’s simplified flat rate (based on hours worked at home per month) or claim the actual business proportion of rent/mortgage interest, utilities and council tax.
• Car: claim 45p per mile (first 10,000 business miles, then 25p) or the business-use share of your real running costs — pick one method.

Expenses you can’t claim

• Purely personal costs
• Client entertaining
• Ordinary commuting to a regular workplace
• Fines and penalties
• Everyday clothing (specialist protective gear or uniforms are different)

Keep records as you go

The difference between a complete claim and a missed one is usually just record-keeping. Capture expenses and receipts through the year — ideally in software — rather than reconstructing it in January. That’s exactly what good self-employed bookkeeping does, and it makes your sole trader tax return faster and cheaper.

Want to see how expenses affect what you actually owe? Try our free sole trader tax calculator, or let our sole trader accountants make sure every legitimate expense is claimed — it usually saves more than our fee.