Sole-trader allowable expenses: what can you claim?

Start with the business purpose

HMRC says a self-employed person can deduct allowable expenses to work out taxable profit. It also makes clear that taking money from the business for personal use is not an allowable expense. The guide lists common categories including office, travel, staff, stock, financial, premises, marketing and business-related training costs.

Categories are a useful filing system, not an automatic answer. A receipt should show what was bought, when, the amount and why it was needed for the trade. Where a cost has a private element, do not put the full amount through as a business expense.

Mixed-use costs need a reasonable split

You can claim only the business part of a cost used for both business and personal reasons. HMRC uses the example of a phone bill: the allowable amount is the business-call proportion, not the whole bill. The same principle can apply to home working, motor costs and subscriptions.

For home working, HMRC says the division should use a reasonable method, such as rooms used for business and time spent working from home. Keep the method and the figures with the records so the calculation can be explained later.

Actual expenses or the £1,000 trading allowance?

HMRC's 2026 taxable-profits guidance says that someone with total receipts above £1,000 can elect to deduct the trading allowance instead of allowable business expenses, including capital allowances. You cannot claim the allowance and actual expenses for the same income.

This is a choice to compare, not a default assumption. List the actual business costs first, then check whether the allowance is more appropriate for that tax year. The decision may also affect how you keep and explain the records.

Simplified expenses are a method, not an extra claim

HMRC offers flat-rate simplified expenses for vehicles, working from home and living at business premises. They can avoid more detailed actual-cost calculations for those areas. They do not sit on top of the same actual costs.

Use HMRC's simplified expenses checker with the real mileage, hours and circumstances. It is designed for sole traders and qualifying partnerships, not limited companies.

Equipment, vehicles and accounting basis

Buying an item that will be kept and used in the business is not always dealt with like a day-to-day running cost. HMRC distinguishes cash-basis and traditional accounting treatment. Under traditional accounting, equipment, machinery and business vehicles are generally considered through capital allowances rather than being deducted as ordinary expenses.

Cars have separate considerations even under the cash basis. If you are unsure whether an item is capital, whether it has mixed use, or how a vehicle is being treated, review it before submitting the return rather than choosing a category by guesswork.

Do not mix employee and sole-trader expense rules

This guide covers trading-income expenses. If you pay a professional subscription as an employee, the employment-expense conditions and HMRC-approved-body rules are different. See our professional subscription tax-relief guide before treating an employee payment as a business cost.

Keep the evidence with the calculation

HMRC's self-employed records guidance requires records of business transactions, including sales, takings, purchases and expenses. The taxable-profits helpsheet also identifies business mileage where simplified vehicle expenses are used.

A practical record set includes invoices and receipts, bank or card evidence, mileage logs where relevant, and notes supporting business-use splits. This makes bookkeeping and Self Assessment preparation more reliable; it does not turn a personal cost into a business one.