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Running your own business as a sole trader comes with both freedom and responsibility. One key part of that responsibility is making sure you’re claiming the correct business expenses. Claiming allowable sole trader expenses reduces your taxable profit, which means you’ll pay less tax — legally and fairly. In this guide, we’ll walk you through the most common expenses you can claim, simplified options available, and how to include everything in your Self Assessment tax return.
Understanding Allowable Expenses
HMRC allows you to deduct expenses that are “wholly and exclusively” for business purposes. This means that you can only claim for things you need to run your business — not for personal or mixed-use items unless you can separate the business portion.
If your allowable expenses are under £1,000 for the year, you can instead use the trading allowance, which lets you claim up to £1,000 of tax-free income without needing to track every individual cost. But if your expenses are higher, it usually makes more sense to record and deduct them fully.
Common Expense Categories for Sole Traders
There’s a wide range of expenses you can claim as a sole trader, depending on the type of work you do. Below are some of the most commonly claimed categories:
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Equipment and technology: This includes laptops, phones, tablets, printers, and software needed for business tasks.
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Professional fees: You can claim the cost of accountancy services, legal advice, and business consultants.
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Marketing and advertising: Expenses like website hosting, business cards, online ads, and social media promotions are claimable.
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Insurance: Business insurance policies, such as public liability or professional indemnity, are fully allowable.
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Office costs: Items like stationery, postage, printer ink, and even rent for a co-working space fall into this category.
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Utilities and internet: If you work from home, you may claim a proportion of your electricity, water, broadband, and phone bills based on business usage.
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Business Mileage and Vehicle Expenses
If you use your personal car for work-related journeys, you can claim mileage using HMRC’s approved rates:
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For the first portion of miles in the tax year
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For additional mileage thereafter
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For motorbikes
This method is often called simplified mileage and is easier than calculating fuel, servicing, insurance and depreciation separately. If your vehicle is used mainly for work and meets certain conditions, you may be able to claim actual vehicle running costs instead — but you can’t switch between the two methods once you’ve chosen one for a particular vehicle.
Simplified Expenses for Self-Employed
To help sole traders avoid complex calculations, HMRC allows flat-rate expenses in certain areas. These include:
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Working from home: A flat rate depending on the number of hours worked from home each month.
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Living in business premises: A flat-rate calculation based on how many people live on the premises.
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Vehicle use: As mentioned, mileage rates simplify claims for cars, vans, or motorbikes used for business.
Simplified expenses can be particularly helpful if your business is small or you prefer not to calculate specific usage.
Working From Home and Premises Expenses
If you work from home, you may claim part of your household bills. You’ll need to calculate the business proportion based on how many rooms you use and for how long.
For example, if you use one room as an office for 40 hours a week, and your house has four rooms, you might claim 25% of your electricity bill for the time that space is used for business.
Keep records to support your method, and be consistent year to year. If your usage varies or is only occasional, using the simplified flat-rate might be easier.
Record-Keeping and Evidence
HMRC requires that you keep records of your business income and expenses for at least six years. This includes:
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Receipts and invoices
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Bank statements
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Mileage logs
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Utility bills (if working from home)
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Proof of professional subscriptions or insurance
You can keep physical or digital records. Many sole traders now use apps or spreadsheets to track their expenses throughout the year, which makes filing your Self Assessment much easier.
What You Cannot Claim
Not everything you spend money on as a sole trader is tax-deductible. You cannot claim for:
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Personal expenses (e.g. everyday clothes, holidays)
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Parking or speeding fines
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Lunches or drinks not directly related to business meetings
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Private phone usage, unless you separate and record the business portion
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Items with dual purpose (unless you can clearly separate business use)
Trying to claim non-allowable expenses can result in penalties, so always double-check if you’re unsure.
How to Include Expenses in Your Self Assessment
When it comes to filling in your Self Assessment tax return, you’ll enter the total allowable expenses in the section for self-employment income.
If you’ve kept records throughout the year, this should be straightforward. HMRC doesn’t require you to list every expense individually, just the total for each category (e.g. “travel,” “office costs,” “professional fees”).
Make sure you know whether you’re using actual costs or simplified expenses — and don’t mix the two for the same item (like claiming both mileage and fuel separately).
Frequently Asked Questions
When is the trading allowance appropriate?
If your self-employed income is under £1,000 a year, you don’t need to register as self-employed or complete a Self Assessment return. If you earn more than £1,000 but your allowable expenses are less than that, you can claim the full trading allowance instead of itemising costs.
Can I claim meals, childcare, or mobile bills?
Meals are only claimable if they’re part of travel away from your normal place of work. Childcare costs aren’t allowable as business expenses. You can claim part of your mobile phone bill if you use it for business and can show how you split usage.
How do simplified expenses compare to actual costs?
Simplified expenses are easier to calculate and avoid needing to keep detailed records. However, if your real business costs are significantly higher, calculating actual costs could reduce your taxable profit more. It’s worth comparing both methods annually.
Conclusion
Sole trader expenses don’t have to be complicated — but getting them right can make a big difference to how much tax you pay. Whether you’re claiming for travel, tech, or home office use, the key is to keep good records, understand the rules, and stick to what’s “wholly and exclusively” for your business.
If you’re unsure, an accountant or tax adviser can help you make the most of your claims while staying compliant.
Discover our bookkeeping services designed for sole traders to track expenses efficiently and maintain organised records.
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