What expenses can a sole trader claim?

A sole trader can deduct the ordinary running costs of the business before Income Tax: office costs, business travel, stock, staff, insurance and bank charges, marketing, trade subscriptions, certain clothing and relevant training. You cannot deduct money you take out for yourself, personal spending or the personal share of anything used both ways. Lower expenses mean more taxable profit, so each entry deserves a moment's thought.

The principle is easiest to see in GOV.UK's own example: turnover of £40,000 and allowable expenses of £10,000 leave £30,000 to pay tax on. You report the totals on your return and send no receipts, but you do need to keep proof in case HMRC asks to see it. If a cost seems borderline, GOV.UK's advice is to contact HMRC.

Two columns: claim or leave out

Many of the disappointments in this area come from a small number of everyday costs that feel like business costs and are not. The table sets each one against its nearest allowable cousin, so you can see where the line falls.

Area	Usually allowable	Not allowable
Travel	Fuel, parking, train and bus fares, vehicle insurance and repairs for business use	Travel between home and work, fines and penalty charges, non-business trips
Food	Meals and hotel rooms when away overnight on business	Ordinary daytime meals, and lunch during a work meeting
Clothing	Safety boots, hard hats, overalls used only for work, uniforms that are not everyday wear, and costumes for acting or advertising	Everyday clothing such as suits and ordinary shoes, even if you only wear them for work
Clients	Website costs and other advertising, food or drink given as part of the service you sell	Tickets, venue hire and hosting meals for clients or suppliers
Owner	Stock, raw materials, subcontractors, staff salaries	Money drawn for your own personal use

The sources are the GOV.UK pages on travel, clothing and marketing and entertainment. Those pages use the word "usually" in places, and they are short summaries, so unusual cases can come out differently.

Costs used partly for the business

Only the business portion counts. GOV.UK's example is a £200 phone bill with £70 of business calls, which allows a claim of £70. Keep the working as well as the bill, because the split is the part someone might question later. This is the line marked "business share only" in the sample page in our record-keeping guide.

Working from home: actual costs

You can claim a share of heating, electricity, Council Tax, mortgage interest or rent, and internet and phone use, split on a reasonable basis such as rooms used and time spent. With four rooms and a £1,120 electricity bill, one room accounts for £280. If that room serves the business one day a week, GOV.UK puts the claim at £40.

Working from home: the flat rate

Sole traders can instead use simplified expenses, which swap the arithmetic for flat rates. The monthly home rate depends on the hours worked there. It does not cover phone or internet, whose business share you still work out separately. A person working 60 hours a month at home all year would have 12 × £18, so £216.

Flat rate	Band	Rate
Home, per month	25 to 50 hours	£10
Home, per month	51 to 100 hours	£18
Home, per month	101 hours or more	£26
Car or goods vehicle	First 10,000 business miles	55p
Car or goods vehicle	After 10,000 business miles	25p
Motorcycle	All business miles	24p
11,000 business miles by van: 10,000 × 55p + 1,000 × 25p		£5,750

Vehicles: pick a method and live with it

You can claim actual running costs such as fuel, insurance and repairs, or use the mileage rates above. Rates apply per vehicle, and you do not have to use them on all of them, but once you use flat rates for a vehicle you must stay with them while it is used for the business. You cannot switch to them for a vehicle where you have already claimed capital allowances or included its costs as an expense. Parking and train fares can go on top. You will need a record of business miles, so a simple log kept as you go is much easier than a reconstruction in January.

Bigger purchases

The treatment of equipment turns on your accounting method. Under traditional accounting you claim capital allowances for equipment, machinery and business vehicles. Under cash basis, most items you keep to use in the business go through as normal expenses, while a business car is claimed through capital allowances. The comparison is set out in our article on the two methods.

Keeping the proof with the claim

HMRC does not ask to see receipts when you file, which makes it tempting to treat them as optional. They are not. GOV.UK's claims page tells you to keep records of all business expenses as proof, and to make sure they are accurate. The easiest routine is to give each receipt a reference as it arrives, write the same reference next to the entry in your book, and note the business reason on anything that would look personal to a stranger. A hotel bill makes sense if you can show the overnight job it belonged to. A parking charge makes more sense next to the customer visit. Doing this on the day takes seconds, while piecing it together from memory at the end of the year is slow and less reliable.

When the £1,000 allowance beats the receipts

There is a £1,000 trading allowance per tax year, and you cannot combine it with expenses. If your gross trading income is £1,000 or less, the allowance covers it all, and you generally do not need to tell HMRC, though you must still keep records. Above that, you can deduct £1,000 in place of your actual expenses. So someone with £3,000 of income and £200 of costs would likely prefer the allowance, and someone with £3,000 of income and £1,800 of costs would not. Registering for Self Assessment remains a requirement once gross trading income goes over £1,000, and our Self Assessment calendar covers the dates. The allowance is not available for income from a partnership or from a company you or a connected person controls.

This article gives general information and cannot decide a specific claim. For mixed-use assets, a large purchase or a claim you would struggle to explain, an accountant or HMRC's own helpline can look at the facts in front of them.

General education, not personal advice. Links in this article go to the GOV.UK pages we read while writing it, opened again on 8 November 2026. Rates and rules change, so check the current figure on GOV.UK before relying on it.