One of the first questions we hear from newly self-employed clients is: what expenses can I claim as a sole trader? It sounds straightforward, but the honest answer is that it depends on a few things — what you’re buying, why you’re buying it, and whether it’s genuinely for your business rather than personal use.

The good news is that HMRC’s framework is fairly logical once you understand the core principle. Allowable expenses reduce your taxable profit, which directly reduces the Income Tax and Class 4 National Insurance you pay. Getting this right isn’t aggressive tax planning — it’s simply making sure you’re not paying tax on money that was legitimately spent running your business.

Below, we’ve set out the main categories, the conditions that determine whether something qualifies, and the areas where we tend to see the most confusion among sole traders.

Before listing categories, it’s worth understanding the principle that underpins all of them. To be an allowable expense, a cost must be incurred wholly and exclusively for the purposes of your business. That wording comes directly from HMRC, and it matters.

If something has a dual purpose — partly personal, partly business — you generally can’t claim the full cost. In some cases you can apportion it (split the cost between personal and business use), and in others the dual-use nature disqualifies it entirely. A laptop used entirely for client work is straightforward. A laptop used half the time to stream films is trickier, and you’d need to make a reasonable, defensible apportionment.

This principle is why you can’t claim your entire phone contract if you also use it personally, and why a restaurant dinner for two with your spouse doesn’t become a business expense just because you talked about work. HMRC looks at the purpose of the expenditure, not just whether your business happened to benefit from it.

Understanding this rule first saves a lot of confusion when you get to the specifics. It’s the lens through which every claim should be assessed.

For most sole traders, the bulk of allowable expenses falls into a handful of predictable categories:

• Office costs — stationery, printer ink, postage, and software subscriptions used for your business.
• Marketing and advertising — website costs, online ads, business cards, and any other promotional spend.
• Professional fees — accountancy fees (yes, including this one), legal costs for business contracts, and professional memberships relevant to your trade.
• Stock and materials — goods you buy to resell, or raw materials used in what you produce or deliver.
• Bank charges and finance costs — business bank account fees and interest on loans taken out for business purposes.
• Training and professional development — courses or qualifications that update your existing skills relevant to your current trade. Note: costs for training in a new, unrelated profession generally don’t qualify.

These are the categories where sole traders tend to be most confident, and rightly so — they’re relatively clear-cut. Keep your receipts, record them promptly, and make sure the expenditure genuinely relates to your business activity.

Working from home is where we see the most uncertainty — and, frankly, the most money left on the table. If you use part of your home for business, you can claim a proportion of your household running costs: things like heating, electricity, broadband, and even rent or mortgage interest (though the latter requires care and specific conditions).

There are two approaches. You can either calculate the actual costs and apportion them by the number of rooms used for business and the time spent working, or you can use HMRC’s simplified flat rate:

• 25–50 hours per month working from home: £10/month
• 51–100 hours per month: £18/month
• 101 or more hours per month: £26/month

The flat rate is simpler but often worth less than the actual-cost method if your business genuinely uses a dedicated space. It’s worth running the numbers both ways.

For mobile phones, if you have a business-only contract or handset, you can claim the full cost. If it’s a personal contract you also use for business, claim only the business proportion — a reasonable estimate of the percentage of calls and data used professionally.

The same logic applies to a landline or broadband package shared between personal and business use: apportion, document your reasoning, and be consistent year on year.

Travel costs for business journeys are allowable — but the commute from your home to a fixed place of work (if you have one) is not. If your home is your base of business, travel to client sites or temporary workplaces generally qualifies.

For vehicles, sole traders have two options when it comes to cars and vans:

Simplified mileage rate

You claim 45p per mile for the first 10,000 business miles in the tax year, then 25p per mile beyond that. Motorcycles have a different rate. This covers fuel, insurance, maintenance, and depreciation in one simple figure. Most sole traders with moderate mileage find this the easier route.

Actual costs

Under traditional accounting, you can claim the actual running costs of the vehicle — fuel, insurance, servicing, and so on — apportioned by business use, plus capital allowances on the purchase price. This can be more favourable if you use your vehicle heavily for business, but it requires more detailed record-keeping.

One important point: once you’ve chosen a method for a particular vehicle, you must stick with it for as long as you use that vehicle. You can’t switch between mileage rate and actual costs partway through. It’s worth choosing deliberately at the outset.

If your self-employment income is relatively low — particularly if you’re running a side business alongside employment — it’s worth knowing about the £1,000 trading allowance. This lets you earn up to £1,000 from self-employment tax-free, with no need to report it or file a Self Assessment return at all (subject to certain conditions).

If your income exceeds £1,000, you can still choose to deduct the allowance instead of your actual expenses. But — and this matters — it’s one or the other. You cannot claim both the trading allowance and your actual expenses in the same tax year. So if your actual costs are higher than £1,000, you’re almost certainly better off claiming them instead.

For most established sole traders with real business costs, the trading allowance is less useful than it sounds. Where it genuinely helps is for people with very small or incidental income — a freelancer doing occasional work, for instance, or someone selling handmade goods alongside a full-time job.

It’s also worth flagging that Making Tax Digital for Income Tax is being phased in from April 2026 for sole traders earning above £50,000, with lower thresholds following. If that affects you, keeping well-organised records now will save significant effort later. Our guide on Self Assessment deadlines has more on what’s changing and when.