One of the most common questions we get from sole traders — especially those filing their first Self Assessment — is what expenses can I claim as a sole trader? The short answer is: any cost you incur wholly and exclusively for the purposes of your business. The longer answer involves a fair bit of nuance, particularly around mixed-use costs like your phone, your car, or the spare room you work from.

HMRC’s position is straightforward in principle: allowable expenses reduce your taxable profit, which reduces your Income Tax and National Insurance bill. A £500 business expense doesn’t save you £500 in tax — it saves you tax at your marginal rate on that £500. But across a year’s worth of legitimate costs, the savings add up, and a lot of sole traders aren’t claiming everything they’re entitled to.

Here’s how we think about it with clients.

Before anything else, it helps to understand the rule rather than just memorise a list. HMRC allows you to deduct costs that are incurred wholly and exclusively for your business. That phrase does real work. A meal you buy while working from home isn’t a business expense — you’d eat regardless. A meal bought while travelling specifically for a client meeting is a different matter.

Personal costs are never allowable, even if you paid for them from your business account. The source of the money doesn’t determine whether something qualifies — the purpose does.

One thing worth flagging: if you’re using the £1,000 trading allowance, you can’t also claim expenses. The trading allowance is a flat deduction in place of actual costs, so it’s one or the other. For most sole traders with real running costs, claiming actual expenses will be more beneficial — but it’s worth checking.

Also worth knowing: how you account for equipment depends on your accounting method. Under cash basis accounting (the default for most sole traders), most business items — including computers and tools — are claimed as an expense in the year you buy them. Under traditional accruals accounting, larger items may instead be treated as capital allowances. If you’re unsure which method you’re on, ask your accountant.

Most sole traders will have at least some of these:

• Office costs — stationery, printer ink, postage, and similar consumables are fully claimable if they’re for business use.
• Software and subscriptions — accounting software, project management tools, industry-specific apps. If the licence renews regularly or the software is used for less than two years, it’s an allowable expense. Some longer-lived software may need to be treated as a capital allowance depending on your accounting method.
• Phone and internet — only the business-use proportion. If you use your mobile 60% for work, you can claim 60% of the bill. HMRC expects you to have a reasonable basis for the split.
• Staff costs — if you employ anyone or use subcontractors, their wages and fees are deductible.
• Professional fees — your accountant’s fees, legal advice directly related to the business, and professional memberships relevant to your trade.
• Marketing and advertising — website costs, paid ads, business cards, directory listings.
• Insurance — public liability, professional indemnity, and business-related insurance premiums.
• Bank charges — interest and charges on a dedicated business account.

This isn’t an exhaustive list — your specific trade will have its own costs on top. A personal trainer will have different allowable expenses to a freelance copywriter or a CIS subcontractor.

If you work from home, you can claim a proportion of your household costs — things like heating, electricity, broadband, and even a share of your rent or mortgage interest. The claim is based on the proportion of your home used for work and the time it’s used for business purposes.

Calculating the actual cost can be fiddly. You’d need to work out the total cost of each bill, divide it by the number of rooms in your home, and then apply a time-based split for the room you use as an office. Doable, but it takes record-keeping.

The alternative is HMRC’s simplified expenses flat rate for working from home, which is based on the number of hours you work at home each month:

• 25–50 hours per month: £10
• 51–100 hours per month: £18
• 101+ hours per month: £26

The flat rate is simpler but won’t always produce the best result. If you work from home a lot and have high household bills, the actual cost calculation is usually worth the effort. HMRC has a simplified expenses checker tool that lets you compare the two approaches before you decide.

Either way, you need to keep records — hours worked at home if you’re using the flat rate, or bills and a room-use calculation if you’re claiming actual costs.

This is an area where we see the most variation between sole traders, and it’s worth getting right.

If you use a vehicle for both personal and business journeys, you have two options. You can claim the actual costs of running the vehicle — fuel, insurance, servicing, MOT, road tax — but only the business-use proportion. Or you can use HMRC’s mileage rates (simplified expenses for vehicles), which is 45p per mile for the first 10,000 business miles in a tax year and 25p per mile after that, for cars and vans.

For most sole traders with a car used for mixed purposes, the mileage rate is simpler and often produces a similar or better result, particularly for lower-mileage vehicles. Once you choose a method for a particular vehicle, you need to stick with it for as long as you own it — so it’s worth thinking about which approach suits you before your first claim.

Beyond vehicle costs, travel costs generally are claimable when the journey is for business purposes — train fares, bus tickets, parking, tolls. Commuting between your home and a regular fixed workplace is not a business journey for most sole traders, though if your home is your base of operations and you travel to client sites from there, that’s a different matter.

Accommodation and subsistence costs on genuine business trips can also be claimed, within reason — HMRC doesn’t specify exact daily limits for sole traders but expects the amounts to be reasonable and evidenced.

You don’t send your receipts to HMRC when you file your Self Assessment tax return — you just enter the totals in the relevant expense categories. But HMRC can open an enquiry into your return and ask to see the evidence behind those figures, so keeping proper records is non-negotiable.

At minimum, keep all invoices, receipts, bank statements, and any mileage logs or home-use records that support your claims. HMRC expects records to be retained for at least five years after the 31 January filing deadline for the relevant tax year.

Practically speaking, the easiest way to manage this is to keep business and personal finances separate — a dedicated business bank account makes a significant difference — and to record expenses as you go rather than trying to reconstruct a year’s worth from memory in January.

It’s also worth being aware that from April 2026, sole traders with self-employment income over £50,000 are required to use Making Tax Digital for Income Tax (MTD for ITSA), which means submitting quarterly summaries of income and expenses digitally via compatible software. MTD will extend to those earning over £30,000 from April 2027 and over £20,000 from April 2028. If you’re approaching those thresholds, getting your record-keeping onto a cloud accounting platform now — rather than scrambling later — is the sensible move.