March 22, 2026
By Merranti

What Expenses Can Sole Traders Claim in the UK? (2026 Guide)

If you are self-employed, one of the most important ways to reduce your tax bill legally is by claiming allowable business expenses.

A very common question is:

What expenses can sole traders claim in the UK?

The simple rule is:

You can claim expenses that are wholly and exclusively for business purposes.

However, the detail matters. Claiming incorrectly can lead to HMRC penalties. Failing to claim properly can mean you overpay tax.

This guide explains:

What sole traders can claim
What cannot be claimed
Common grey areas
Home office and vehicle rules
How expenses reduce your tax bill

How Sole Trader Expenses Reduce Tax

As a sole trader, you pay tax on your profit, not your turnover.

Profit is calculated as:

Business income
minus
Allowable business expenses

The lower your taxable profit (legitimately), the lower your Income Tax and National Insurance.

For example:

Income: £60,000
Expenses: £20,000
Taxable profit: £40,000

You only pay tax on £40,000.

The Core Rule: “Wholly and Exclusively”

HMRC’s test is whether the expense is incurred wholly and exclusively for the purpose of the trade.

If an expense has a personal element, it may:

Not be allowed at all
Only be partially allowable

Understanding this principle prevents mistakes.

Office and Running Costs Sole Traders Can Claim

1. Office Costs

You can claim:

Stationery
Printing
Postage
Business phone costs
Software subscriptions
Cloud accounting software

If a mobile phone is used partly for personal use, you must claim the business proportion only.

2. Rent and Business Premises Costs

If you rent office or shop space, you can claim:

Rent
Business rates
Utilities
Cleaning
Security

If you work from home, separate rules apply (see below).

Travel Expenses Sole Traders Can Claim

Travel must be for business purposes.

Allowable travel expenses include:

Fuel for business journeys
Train fares
Air travel
Hotel accommodation (business trips)
Parking
Tolls

Ordinary commuting (home to permanent workplace) is not allowable.

Car Expenses: Two Methods

If you use your personal car for business, you have two options:

1. Simplified Mileage Method

You can claim:

45p per mile for the first 10,000 business miles
25p per mile thereafter

This covers fuel, servicing, insurance and wear and tear.

No additional vehicle costs can be claimed under this method.

2. Actual Cost Method

Alternatively, you can claim the business proportion of:

Fuel
Insurance
Repairs
Servicing
Road tax
Breakdown cover

You must keep accurate records and apply a business-use percentage.

Once you choose a method for a vehicle, you must stick with it.

Home Office Expenses for Sole Traders

If you work from home, you can claim part of your household costs.

You have two options:

1. Simplified Flat Rate

HMRC allows a flat monthly rate based on hours worked at home.

This is simple and requires minimal calculation.

2. Actual Cost Apportionment

You can calculate a proportion of:

Rent or mortgage interest (not capital repayment)
Utilities
Internet
Council tax

This is based on:

Number of rooms
Time used for business

Care must be taken to avoid creating Capital Gains Tax complications on your home.

Equipment and Tools

You can claim:

Laptops
Computers
Office furniture
Tools
Machinery

These may qualify for capital allowances.

Certain purchases may qualify for full deduction in the year of purchase, depending on eligibility.

Professional Fees and Financial Costs

Allowable expenses include:

Accountancy fees
Legal fees (business related)
Business bank charges
Business insurance
Professional memberships (if relevant to your trade)

Personal legal costs are not allowable.

Marketing and Advertising

You can claim:

Website hosting
Domain registration
Social media advertising
Google Ads
Printed marketing materials
Branding design

Marketing must relate directly to your business activity.

Training and Courses

You can claim training that:

Maintains or updates existing skills
Is relevant to your current trade

You cannot claim training that:

Enables you to start a new trade
Is unrelated to your business

Clothing: What Is Allowed?

This is commonly misunderstood.

You can claim:

Protective clothing (e.g. safety boots)
Uniforms with business branding
Specialist workwear

You cannot claim:

Everyday clothing
Business suits
General outfits

Even if you wear them only for work, normal clothing is not allowable.

Food and Subsistence

You can claim meals if:

You are travelling for business
You are working away from your normal base

You cannot claim:

Everyday lunch while working locally
Personal groceries

The key test is whether it is an additional cost caused by business travel.

Insurance Sole Traders Can Claim

Allowable insurance includes:

Public liability insurance
Professional indemnity insurance
Employer’s liability insurance
Business contents insurance

Personal insurance policies are not allowable.

Bad Debts

If a customer does not pay and you have included the income in your accounts, you can claim the bad debt as an expense.

It must be genuinely irrecoverable.

What Sole Traders Cannot Claim

Common non-allowable expenses include:

Personal expenses
Fines and penalties
Client entertainment
Personal mortgage repayments
Drawings (money you take from the business)

Drawings are not a business expense — they are your profit withdrawal.

Client Entertainment Rules

Taking clients out for meals or events is generally not deductible for tax purposes.

This surprises many business owners.

However, staff entertainment rules are different (if you have employees).

Capital vs Revenue: Why It Matters

Expenses that create long-term value (e.g. buying major equipment) may be treated differently from everyday running costs.

These fall under capital allowances rather than day-to-day expense deductions.

Correct classification is important for accurate tax reporting.

Record-Keeping Requirements

You must keep records of:

Income
Receipts
Invoices
Bank statements

Records must usually be kept for at least five years after the 31 January filing deadline.

Poor record-keeping increases the risk of HMRC enquiry.

Common Sole Trader Expense Mistakes

We frequently see:

Claiming 100% of mixed-use expenses
Claiming personal fuel
Claiming everyday clothing
Forgetting to claim allowable expenses
Poor mileage records
Confusing drawings with expenses

Errors can result in penalties or overpayment of tax.

How Merranti Accounting Can Help

At Merranti Accounting, we help sole traders:

Identify all allowable expenses
Structure record-keeping properly
Calculate business-use proportions correctly
Avoid over-claiming or under-claiming
Prepare accurate Self Assessment returns
Plan tax efficiently before year-end

Clear expense categorisation reduces risk and ensures you only pay the tax legally due.

Final Answer: What Expenses Can Sole Traders Claim in the UK?

Sole traders can claim expenses that are wholly and exclusively for business purposes, including:

Office costs
Travel
Vehicle expenses
Home office costs
Equipment
Professional fees
Marketing
Insurance

However, personal expenses, everyday clothing, client entertainment, and drawings are not allowable.

Understanding what you can and cannot claim ensures you minimise tax legally while staying compliant with HMRC rules.

If you are unsure whether a specific expense qualifies, professional advice should be sought before submitting your tax return.