What expenses can I claim as a sole trader? A UK tax guide

For many of the 4.2 million self-employed sole traders in the UK, claiming allowable business expenses is one of the most financially rewarding things they can do for their business finances. When you reduce your taxable profit by £1 through an allowable expense, you reduce both Income Tax (Income Tax) and National Insurance Contributions (NICs). With proper planning, allowable expenses could result in a sole trader saving hundreds or thousands of pounds per annum.

The problem is knowing what you can claim as allowable business expenses. HMRC’s rules for allowable business expenses are based on a singular central test; expenses must have been incurred ‘wholly and exclusively’ for the purpose of your trade; however, in practice this test can be difficult to apply. Can you claim your broadband bill? Your mobile phone? New laptop? Home Office? Business Suit? Client Lunch? The answer will depend upon the individual circumstances of each case and wrong answer will cost you money; under-claimed expenses leave money unclaimed and over-claimed expenses risk penalties should HMRC investigate.

This guide covers all main expense categories for sole traders in respect of the 2025/26 tax year together with HMRC’s current rules, examples and guidance relating to commonly encountered grey areas. In addition, this guide provides information regarding HMRC’s Simplified Expenses – HMRC’s flat rate expense allowance scheme designed to make some of the more complex expense claims easier.

The fundamental rule: ‘wholly and exclusively’

Every expense you claim as a sole trader must pass one test, drawn from HMRC’s Business Income Manual (BIM37000): it must be incurred ‘wholly and exclusively’ for the purposes of your trade. Understanding what this means in practice is the foundation of getting your expenses right.

‘Wholly’ means the cost was incurred entirely for business. ‘Exclusively’ means the sole purpose of the expense was business — not partly business and partly personal.

If an expense has a dual purpose that cannot be clearly separated, HMRC will disallow the whole thing. The most cited example is a business suit: even if you buy it solely for client meetings and only ever wear it to work, it also provides warmth and decency (a personal benefit), so HMRC disallows it entirely. This is the ruling from the case Mallalieu v Drummond [1983], which still applies today.

The important exception: if an expense is mixed-use but the business and personal portions can be clearly identified and separated, you can claim the business portion. The most common example is a mobile phone with mixed personal and business use: if you can identify what proportion relates to business, you can claim that proportion. A phone used 60% for business means you claim 60% of the bill.

The trading allowance: when it applies and when to ignore it

If your total self-employment income is £1,000 or less in a tax year, you can use the trading allowance instead of claiming expenses — your income up to £1,000 is simply tax-free, and you don’t need to file a Self Assessment return.

If your income exceeds £1,000, you have a choice. You can use the trading allowance (deduct £1,000 from your income) or claim your actual allowable expenses — whichever gives you the bigger deduction. You cannot use both.

For most sole traders earning a real income from their business, actual expenses will almost always exceed £1,000. In that case, the trading allowance is irrelevant and you should claim your actual costs. The trading allowance is mainly useful for very occasional side income — selling items online, a few hours of freelance work, or similar low-level activity.

  ⚠️  You can’t claim expenses AND the trading allowance

  If your self-employment income is above £1,000 and you use the trading allowance, you cannot claim any other expenses. Always calculate whether your actual expenses exceed £1,000 before deciding which to use.

Quick reference: what can you claim?

Here’s a summary of the major expense categories. We cover each in detail in the sections below.

This table summarises the general position. Individual circumstances vary — always apply the ‘wholly and exclusively’ test to your specific situation and keep records to support every claim.

1. Office and business running costs

Office running costs are among the most straightforward expenses to claim, as long as they are clearly for business use. These are claimed as day-to-day expenses (not capital allowances) on your Self Assessment return.

What you can claim

• Stationery, postage, and printing
• Business telephone calls (business portion of a mixed-use landline)
• A business mobile phone used exclusively for business (full cost)
• Business portion of a personal mobile phone (proportionate to business use)
• Business portion of your broadband/internet (proportionate to business use)
• Office rent and business rates (if you rent a dedicated office space)
• Cleaning costs for a dedicated business premises
• Software subscriptions used for business (accounting software, design tools, etc.)
• Computer consumables used for business (ink, paper, USB drives)

Mixed-use phone and broadband

Most sole traders use the same phone and broadband for both work and personal use. HMRC expects you to make a fair and reasonable apportionment. There’s no fixed formula — a common approach is to estimate what percentage of your usage is business and claim that proportion. If you use your phone 50% for business, claim 50% of the bill. Keep your own calculation in case HMRC asks.

If you have a second phone line or SIM card used exclusively for business, you can claim the full cost without apportionment.

2. Working from home expenses

If you run your business from home — whether full-time or part of the time — you can claim a portion of your home running costs as a business expense. HMRC offers two methods: actual costs (more accurate but more work) or simplified expenses (flat rates, quicker and simpler).

Method 1: Simplified expenses flat rates (recommended for most sole traders)

HMRC’s simplified expenses scheme lets you claim a fixed monthly amount based on how many hours you work from home, without needing to calculate actual utility bills or room proportions. Only sole traders and partnerships (not limited companies) can use this method.

Important: you must work at least 25 hours per month from home to use this method. If you work fewer hours, you cannot use the simplified expenses rate and must use actual costs instead.

What the flat rate covers: heating, electricity, and water costs only. Internet and phone costs are not included — claim those separately as office costs (proportionate to business use).

  📝  Example: Simplified home working expenses

  Anna is a freelance copywriter working from home.

  She works 60 hours per month from home.

  Applicable flat rate: £18/month.

  Annual claim (simplified expenses): 12 × £18 = £216

  She also claims 40% of her £50/month broadband bill as an office cost.

  Broadband claim: £50 × 40% × 12 = £240

  → Total home-working claims: £456 per year

Method 2: Actual costs (proportionate calculation)

If the flat rate doesn’t reflect your actual home working costs — for example, if you have a large home office that significantly increases your heating and electricity bills — you can calculate a proportion of your actual household bills.

The standard method is to divide the number of rooms you use for business by the total number of rooms in your home (excluding bathrooms, kitchens, and hallways), then multiply by the hours you work there as a proportion of the total time the room is occupied.

  📝  Example: Actual costs method

  Mark runs a photography business from a dedicated spare bedroom (1 of 5 rooms).

  He uses the room exclusively for work Monday–Friday, 8 hours/day.

  Room proportion: 1/5 = 20%

  Time proportion: ~8hrs/day ÷ 24hrs = 33%

  Combined proportion: 20% × 33% = ~6.7%

  Annual household bills (heating, electricity, water): £3,200

  → Annual home office claim: £3,200 × 6.7% = £214

  Note: in this case, the simplified expenses flat rate (£26/month = £312/year) is actually higher.

  → Always run both calculations and claim whichever is greater.

Important: the Capital Gains Tax risk of exclusive use

If you declare a room in your home as exclusively used for business, HMRC may consider that portion of your home as having lost its principal private residence status. When you sell your home, that portion could be subject to Capital Gains Tax. This is why most home-working sole traders ensure there is at least some personal use of the space, and why the simplified flat rate (which doesn’t require exclusive use) is often the safer choice for those with relatively modest home-working costs.

3. Travel and transport expenses

Travel costs are a significant expense for many sole traders, but the rules are specific about what qualifies. The most important rule is that ordinary commuting — travelling between your home and a permanent workplace — is never allowable. Only travel to ‘temporary workplaces’ qualifies.

What counts as a temporary workplace?

A temporary workplace is one you attend for a specific task or for a limited period, where you do not expect to attend regularly or for more than 24 months. Client sites, project locations, conferences, and networking events all typically qualify. A place becomes a permanent workplace if you attend it regularly for more than 24 months and it accounts for more than 40% of your working time.

For most sole traders who work from home and travel to clients, all client visits typically qualify as travel to temporary workplaces — because your home is your permanent base and each client location is temporary.

Allowable travel expenses

• Train, bus, underground, and coach tickets (business journeys only)
• Taxi fares for business journeys
• Flights for business trips
• Car parking costs at a temporary workplace
• Tolls and congestion charges on business journeys
• Car hire for business journeys
• Mileage in your own vehicle (using HMRC’s approved rates — see below)

Business mileage in your own vehicle

If you use your personal car, van, motorcycle, or bicycle for business journeys, you can claim using HMRC’s Approved Mileage Allowance Payment (AMAP) rates. These are the same rates for 2025/26 as the previous year — HMRC has not changed them since 2011.

The 10,000-mile threshold applies per tax year (6 April to 5 April) and resets annually. If you drive 12,000 business miles in a year, you claim: (10,000 × 45p) + (2,000 × 25p) = £4,500 + £500 = £5,000.

  📝  Example: Mileage claim

  Sarah is a sole trader who drives to client sites.

  Business miles driven in 2025/26: 7,400 miles

  All miles are within the first 10,000, so: 7,400 × 45p = £3,330

  → Sarah claims £3,330 as a travel expense on her Self Assessment return.

  She keeps a mileage log with date, start/end point, purpose, and miles for each trip.

If you use the mileage rate, you can’t also claim car running costs

This is an important point that trips up many sole traders. If you claim HMRC’s mileage rate, those rates are designed to cover everything — fuel, insurance, servicing, MOT, depreciation. You cannot also claim actual car running costs such as petrol, insurance, or service costs on top. It’s one method or the other. For most sole traders, the mileage rate is simpler and often more generous than calculating actual costs.

The exception is if you buy a car specifically for your business, in which case you may want to consider capital allowances on the purchase (see the Equipment section below). Cars cannot use the Annual Investment Allowance — they have their own capital allowances regime.

What you cannot claim

• Commuting between your home and a permanent workplace
• Parking fines, speeding fines, or congestion charge fines
• The cost of buying a personal vehicle that you also use privately (capital allowances apply instead, restricted to business use proportion)

4. Equipment, tools, and capital items

When you buy something that will last beyond a single tax year — a laptop, camera, tools, machinery, a vehicle — it’s treated differently from day-to-day running costs. These are ‘capital items’, and you claim them through capital allowances rather than as direct expenses.

The Annual Investment Allowance (AIA)

The Annual Investment Allowance lets you deduct up to £1 million of qualifying equipment purchases from your taxable profit in the year you buy them. For virtually all sole traders, the AIA means you can claim the full cost of any business equipment in the year of purchase — no spreading the cost over years. This is a very generous allowance.

• Laptops, computers, and tablets (business use)
• Tools and specialist equipment
• Cameras, recording equipment, and creative tools
• Machinery for your trade
• Office furniture (desks, chairs, filing cabinets)
• Vans and commercial vehicles (but not cars — see below)

Cars are excluded from the AIA. They have their own capital allowances: 100% first-year allowance for zero-emission cars; 6% writing down allowance per year for higher-emission cars (above 50g/km CO2 in 2025/26). For sole traders using a car for both personal and business purposes, the capital allowance is restricted to the business use proportion.

Mixed-use equipment

If you buy equipment that you use for both business and personal purposes — a laptop used for work and personal browsing, for example — you must reduce your capital allowance claim to reflect the business use proportion. If you use a laptop 70% for business, your AIA claim is 70% of the purchase price.

  📝  Example: Capital allowance on a laptop

  Tom buys a laptop for £1,200 in 2025/26.

  He estimates 75% business use (work tasks, client email, accounting software).

  AIA claim: £1,200 × 75% = £900

  → Tom claims £900 through capital allowances on his Self Assessment return.

  He cannot also claim the laptop as a day-to-day expense — it’s a capital item.

Cash basis accounting and capital items

If you use cash basis accounting (the simpler method available to sole traders with turnover under £150,000), most capital items can be claimed as an expense in the year of purchase, rather than through the formal capital allowances system. The main exceptions are cars, land, and financial assets. Check the gov.uk guidance on cash basis if you’re unsure which method you use.

5. Staff and subcontractor costs

Sole traders can employ staff, and the costs of doing so are allowable business expenses. This is worth knowing — there’s a common misconception that sole traders can’t have employees, but the term ‘sole trader’ refers to your business structure, not how many people you employ.

• Wages and salaries: The gross wages of any employees you pay are allowable business expenses.
• Employer’s National Insurance contributions: The employer NIC you pay on employees’ earnings (13.8% in 2025/26 above the secondary threshold) is fully allowable.
• Pension contributions: Employer pension contributions you make under auto-enrolment or voluntarily are allowable.
• Staff benefits: Benefits you provide to employees (health insurance, training, etc.) are generally allowable, subject to the relevant PAYE/P11D rules.
• Recruitment costs: Agency fees, job board advertising, and similar recruitment costs are allowable.
• Subcontractor costs: If you hire freelancers or subcontractors to do work for your business, their fees are a fully allowable expense.

6. Stock, materials, and cost of goods sold

If your business involves buying materials to use in your trade, or buying goods to resell, those costs are allowable business expenses. This category applies particularly to tradespeople, retailers, manufacturers, and anyone whose work involves physical materials.

• Raw materials used to make products you sell
• Goods purchased specifically for resale
• Direct materials used on client projects (e.g. a plumber’s pipe and fittings, a carpenter’s timber)
• Packaging materials for goods you sell
• Stock that has been used, sold, or consumed in the year

Unsold stock: Only stock that has been sold or used during the tax year is deductible in that year. Stock still in hand at year-end is not claimed as an expense — instead, it’s carried forward as a closing stock value and will be deductible when it’s eventually used or sold. This is a standard accounting principle, but it catches some sole traders out when their business is growing rapidly and they’re carrying significant stock.

7. Marketing and advertising

Money spent promoting your business is a straightforward allowable expense. HMRC takes a broad view of marketing, and the category covers everything from Google Ads to your business website.

• Website domain registration and hosting fees
• Website design and development costs (see capital allowances note below)
• Google Ads, Facebook Ads, LinkedIn Ads, and similar paid advertising
• Print advertising (local papers, industry directories, trade press)
• Business cards, leaflets, and brochures
• Social media management tools and subscriptions
• Email marketing platforms (Mailchimp, etc.)
• SEO tools and services
• PR agency fees
• Sponsorships of events or organisations (if for genuine business promotion)

Website development costs: A simple informational website is typically treated as a revenue expense (claimed in full in the year). A more complex website that provides ongoing business functionality — a booking system, an ecommerce platform — may be treated as a capital item and claimed through capital allowances. Ask your accountant if you’re unsure.

8. Professional fees and subscriptions

Accountant and bookkeeper fees

Fees paid to an accountant or bookkeeper for work relating to your business accounts are fully allowable — this includes preparing your accounts, advice on business tax matters, and VAT return preparation. However, fees specifically relating to your personal tax affairs (inheritance planning, personal income tax disputes unrelated to your business) are not allowable.

Legal fees

Legal costs relating to your business are allowable: contracts, commercial disputes, debt collection, and employment matters. Legal fees relating to capital transactions (buying or selling a business, acquiring property) are typically treated as capital costs and may be claimed through capital allowances. Fines and penalties imposed by courts are never allowable.

Professional body memberships

Membership fees for recognised professional or trade bodies are allowable if membership is relevant to your business. Examples include membership of the Chartered Institute of Marketing, the British Medical Association (for medical professionals), the Royal Institute of British Architects, trade union subscriptions, and similar. You can also claim subscriptions to trade or professional journals.

What’s not allowable

• Personal tax advice fees (your personal income tax, separate from your business)
• Legal fines and court penalties
• Costs of forming or dissolving a limited company (not relevant for sole traders, but a common question)

9. Training and professional development

Training costs can be allowable, but there’s an important limitation that catches many sole traders out: you can only claim training that updates or maintains skills you already use in your current trade. You cannot claim training that qualifies you for a new trade or profession.

Allowable training

• A web designer updating their skills on a new design tool
• A personal trainer taking a first aid refresher course
• A bookkeeper attending a CPD course on new accounting standards
• A plumber training on a new type of heating system
• A freelance writer taking a course on a new area of writing they already cover

Not allowable training

• A mechanic training as a financial adviser (completely different trade)
• An employee with no previous qualifications training to become a qualified accountant
• Any qualification that is required to enter your trade in the first place

The grey area: the line between ‘updating existing skills’ and ‘qualifying for a new trade’ is not always obvious. A fitness instructor adding a new specialism (yoga, pilates) is likely allowable. A nurse training as a doctor probably isn’t. If you’re unsure, check with your accountant.

10. Business insurance

Premiums for insurance policies taken out for genuine business purposes are fully allowable. This is a clean, straightforward category.

• Professional indemnity insurance
• Public liability insurance
• Employers’ liability insurance (if you have employees)
• Business contents insurance
• Business vehicle insurance (for a vehicle used for business)
• Cyber insurance
• Product liability insurance

Personal insurance policies — life insurance, critical illness cover, private health insurance for yourself — are not allowable business expenses, as they provide a personal benefit. The exception is a group healthcare policy covering employees, which can be allowable (subject to P11D reporting for employees).

11. Bank charges and finance costs

• Business bank account fees and transaction charges
• Interest on business loans (not personal loans)
• Overdraft interest on a business account
• Credit card interest on business expenditure (business card)
• Payment processing fees (Stripe, PayPal, Square transaction fees)
• Invoice factoring or discounting fees

Interest on personal borrowing: if you use money from a personal loan to fund your business, you can claim the interest — but you need to clearly evidence that the funds were introduced into the business and used for business purposes. This is an area where good record-keeping matters.

Not allowable: capital repayments on loans (the repayment of the principal is not an expense); charges that are capital in nature (arrangement fees on a business property purchase, for example).

12. Clothing: a common source of confusion

The clothing rules catch many sole traders out, particularly those in client-facing roles who spend money on smart work attire.

What you can claim

• Protective clothing required by the nature of your work (hard hat, high-visibility vest, protective boots, overalls)
• A branded uniform with your business name or logo — the branding prevents it being worn as everyday clothing
• Costumes required for a performance (actors, performers)

What you cannot claim

• A business suit, even if worn exclusively to client meetings
• Smart shoes worn for work
• ‘Work’ clothes that could also be worn casually — jeans, shirts, dresses
• Clothing bought to look professional in video calls

The principle (from the Mallalieu v Drummond case) is that ordinary clothing provides a personal benefit — warmth and decency — regardless of its business purpose. Until HMRC changes this position, the rules are strict. A builder’s steel-toe boots: allowable. A lawyer’s suit: not allowable.

13. Pension contributions: not a business expense, but still tax-efficient

Pension contributions are not deducted as a business expense — they do not reduce your taxable profit. However, they are still tax-efficient: you can claim tax relief on personal pension contributions on your Self Assessment tax return, which effectively gives you back the tax you’ve paid on the money you put into your pension.

Basic-rate taxpayers receive 20% tax relief automatically (the pension provider claims it from HMRC). Higher-rate taxpayers (above £50,270 in 2025/26) can claim the additional 20% relief through Self Assessment. The annual pension contribution limit is £60,000 (or your total earnings if lower), subject to anti-avoidance rules.

Record keeping: what you need and for how long

HMRC requires sole traders to keep accurate records of all business income and expenses. You don’t submit the records to HMRC, but you must hold them in case HMRC opens an enquiry into your return.

What records to keep

• Receipts and invoices for all business purchases
• Bank statements for your business account
• A mileage log for any vehicle mileage claims (date, start/end location, purpose, miles)
• Records of hours worked from home if using simplified expenses
• Records of how you calculated the business proportion of mixed-use items
• All invoices you’ve raised and records of income received

How long to keep records

You must keep your records for at least five years after the 31 January filing deadline for the relevant tax year. For the 2025/26 tax year (return due 31 January 2027), you need to keep records until at least 31 January 2032.

Digital records are acceptable — HMRC does not require paper. Photographing receipts with a mobile app (Dext, AutoEntry, Hubdoc) and storing them digitally is perfectly fine. The key requirement is that records are legible and accessible if HMRC asks for them.

  💡  Use accounting software — especially with MTD coming

  Making Tax Digital for Income Tax became mandatory for sole traders and landlords with income over £50,000 from 6 April 2026, and will extend to those with income over £30,000 from April 2027. MTD requires digital record keeping and quarterly submissions to HMRC. Accounting software like QuickBooks, Xero, FreeAgent, or Sage will handle this automatically, track expenses as you go, and give you a real-time view of your taxable profit — making the whole process significantly less stressful than a once-a-year spreadsheet.

Worked example: how expenses reduce your tax bill

To make this concrete, here’s a full example of how allowable expenses reduce a sole trader’s Income Tax and National Insurance.

  📝  Example: Sam, a freelance photographer, 2025/26

  Sam’s gross income from photography: £52,000

  Allowable expenses claimed:

    Camera and lens (Annual Investment Allowance, 100% business): £2,800

    Travel to client shoots (mileage, 6,200 miles × 45p): £2,790

    Home working (60hrs/month × 12 × £18 flat rate): £216

    Broadband (50% business × £55/month × 12): £330

    Software subscriptions (Lightroom, cloud storage): £240

    Professional indemnity insurance: £480

    Professional body membership: £180

    Accountant’s fees: £600

    Marketing (website hosting, social media ads): £720

  ──────────────────────────────────────────────

  Total allowable expenses: £8,356

  Taxable profit: £52,000 − £8,356 = £43,644

  Income Tax (2025/26 rates, England/Wales):

    Personal Allowance (0% on first £12,570): £0

    Basic rate 20% on £31,074 (£12,570 to £43,644): £6,215

  Class 4 NIC (9% on profit between £12,570 and £50,270):

    9% × £31,074 = £2,797

  Total tax and NIC on £43,644 taxable profit: ~£9,012

  Without expenses (tax on full £52,000 profit):

    Income Tax: £12,483  |  Class 4 NIC: £3,573  |  Total: ~£16,056

  → Tax saving from claiming £8,356 of expenses: approximately £7,044

This example illustrates why knowing your allowable expenses matters. Sam’s £8,356 of legitimate expenses saved approximately £7,044 in tax — a saving rate of around 84 pence in tax saved for every pound of expenses claimed, because she’s a basic-rate taxpayer paying 20% income tax plus 9% Class 4 NIC.

Frequently asked questions

Can I claim my mobile phone as a business expense?

Yes, but only the business portion. If your personal mobile is used 60% for business, claim 60% of the bill. If you have a separate phone exclusively for business, claim the full cost. Keep your own calculation in case HMRC asks for it. A phone contract taken out in your business name and used solely for business can be claimed in full.

Can I claim for food and meals while working?

This is one of the most commonly misunderstood areas. You cannot claim for everyday meals — HMRC’s position is that everyone has to eat, so eating while working isn’t ‘wholly and exclusively’ for business. The exception is subsistence: if you’re travelling away from your normal business base for a business trip (for example, staying overnight at a conference location), you can claim reasonable meal costs as part of the overall travel and subsistence. Day-to-day lunches at your desk or near your regular workplace are not claimable.

Can I claim the cost of my home broadband if I work from home?

Yes, but only the business proportion. Estimate what percentage of your home broadband use is for business and claim that share. The simplified expenses flat rate for home working (£10–£26/month) covers only heating and electricity — broadband is claimed separately as an office cost. If your broadband is used 50% for business, claim 50% of the monthly bill.

Can I claim for buying a car for my business?

Cars are treated differently from other equipment. You cannot use the Annual Investment Allowance on a car. Instead, capital allowances apply: 100% first-year allowance for zero-emission (electric) cars, and 6% writing down allowance per year for higher-emission cars. If you use the car for both business and personal use, you must restrict the allowance to the business proportion. Alternatively, if you use your own existing car for business journeys, the mileage rate approach (45p/25p per mile) is much simpler and avoids the capital allowances complexity entirely.

Can I claim for entertaining clients?

No. Client entertainment is never an allowable business expense under HMRC rules, regardless of how clearly it relates to your business or what you call it. This covers meals, drinks, events, gifts (other than small promotional gifts worth under £50 per recipient per year with your business branding on them), and hospitality of any kind. There are no exceptions. Staff entertainment for your employees (including yourself, in limited circumstances) can be allowable up to £150 per head per year for a qualifying annual event.

Can I claim the cost of my accountant?

Yes — accountant and bookkeeper fees for work relating to your business are fully allowable business expenses. This includes preparing your business accounts, tax return completion for your self-employment income, VAT advice and returns, and general business tax planning. Fees specifically for purely personal tax matters (inheritance planning, for example) would not be allowable.

I haven’t kept receipts for all my expenses — can I still claim them?

Technically, HMRC requires records to support every expense claim. If you’re missing receipts, you may be able to reconstruct evidence from bank statements, card statements, or emails — but HMRC could challenge claims without documentary evidence during an enquiry. Going forward, the most practical solution is to use accounting software with a receipt capture feature (Dext, Hubdoc, or the receipt scanning in QuickBooks or Xero) so you never lose a receipt again.

What happens if I claim expenses HMRC doesn’t allow?

If HMRC opens an enquiry into your return and finds disallowable expenses, they will adjust your taxable profit upward and issue a revised tax calculation. You’ll owe the additional tax plus interest from the original due date. If HMRC considers the overclaiming to be careless, they can also charge a penalty — typically 0–30% of the additional tax for careless errors. Deliberate overclaiming can attract penalties of 70–100% of the tax lost. The best protection is to keep good records, apply the ‘wholly and exclusively’ test genuinely, and seek professional advice when you’re unsure.

Year-end expenses checklist for sole traders

Before you complete your Self Assessment, run through this checklist to make sure you haven’t missed any allowable claims:

• Office costs: stationery, postage, printing, computer consumables, software subscriptions
• Working from home: flat rate or proportionate share of bills (at least 25 hours/month required for flat rate)
• Phone and broadband: business proportion claimed separately from home working
• Business travel: train, bus, taxi, flight, parking, tolls — all business journeys logged and documented
• Mileage: log checked and totalled (date, destination, purpose, miles for each trip)
• Equipment: any capital purchases noted for capital allowances / AIA (for mixed use, business proportion calculated)
• Stock and materials: all costs of goods and raw materials used in the year
• Staff costs: wages, employer NIC, employer pension contributions, subcontractor fees
• Marketing: advertising, website costs, social media, print materials
• Professional fees: accountant, solicitor, professional body memberships, trade journals
• Business insurance: all relevant premiums
• Bank charges: account fees, payment processing charges, business loan interest
• Training: any CPD or skills-updating courses relevant to your current trade

Related guides:

Making Tax Digital for Income Tax: complete guide

Useful HMRC links:

https://gov.uk/expenses-if-youre-self-employed

https://gov.uk/simpler-income-tax-simplified-expenses

https://gov.uk/capital-allowances/annual-investment-allowance

This guide is for general information only and does not constitute professional tax advice. Tax rules can change. Always verify the current position with HMRC’s official guidance at gov.uk or speak with a qualified accountant before making decisions about your tax affairs. The worked examples in this article use 2025/26 tax rates for England and Wales. Different rates apply in Scotland.