9. March 2026

Guide On Which Expenses Sole Traders Can Claim 2026

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

Intro

Sole traders and small businesses make up the largest share of the UK’s tax gap. According to HMRC’s latest figures, the difference between the tax owed and the tax actually collected was £46.8 billion in the 2023–24 tax year, with around 60 percent of that gap linked to small businesses. Many of these shortfalls happen because of mistakes, misunderstandings, or poor record keeping when preparing tax returns.

For sole traders, one of the most common areas of confusion is business expenses. Many self-employed people either miss legitimate deductions or are unsure which costs they are allowed to claim.

Understanding allowable expenses is important because it ensures you only pay tax on your actual profit rather than your total income.

This guide explains what expenses sole traders can claim in the UK, how they reduce your tax bill, and some of the common mistakes to avoid.

What are allowable expenses?

Allowable expenses are business costs that HMRC allows you to deduct from your income before calculating tax.

Sole traders pay tax on their profit. Profit is calculated by subtracting business expenses from the total income earned by the business.

For example:

If your business earns £40,000 during the year and you have £10,000 in allowable expenses, you will only pay tax on £30,000.

Because of this, keeping accurate records of expenses throughout the year is important. Missing legitimate expenses can mean paying more tax than necessary.

Common expenses sole traders can claim

Many everyday costs involved in running a business can be deducted as allowable expenses. Below are some of the most common examples.

Office expenses

Office expenses include the everyday items needed to run your business. This can include stationery, printing, postage, and software subscriptions.

If you regularly purchase supplies that are used only for your business, these costs will usually be allowable.

Marketing and advertising

Promoting your business is considered a normal business cost.

Examples of marketing expenses include website hosting, online advertising, branding, graphic design, and printed promotional materials such as business cards or flyers.

Professional services

Many businesses need professional advice or support. Fees paid to accountants, solicitors, consultants, or industry organisations can usually be claimed as business expenses.

Professional memberships related to your industry may also be allowable.

Business equipment

Equipment used for your business may also be claimed.

This might include computers, laptops, office furniture, tools, machinery, or cameras depending on the type of work you do.

Some larger purchases may be claimed using capital allowances rather than as a standard expense.

Can sole traders claim fuel and mileage?

If you travel for business purposes, the associated costs can normally be claimed.

This may include fuel, parking, public transport, or taxi fares when travelling for work.

If you use your personal vehicle for business journeys, you may also be able to claim mileage using HMRC’s approved mileage rates.

However, travel between your home and a regular workplace is usually considered commuting and cannot normally be claimed.

Can sole traders claim phone and internet bills?

Yes, but only the business portion of the bill can be claimed.

If your phone or internet connection is used for both personal and business purposes, you need to estimate how much of the usage relates to work.

For example, if around half of your phone usage is business related, you could claim 50 percent of the monthly bill as a business expense.

Keeping itemised bills or usage records can help support this estimate if needed.

Can sole traders claim rent or mortgage costs?

If you run your business from home, you may be able to claim a portion of your household costs.

These may include electricity, heating, internet, and a proportion of rent or mortgage interest.

Alternatively, HMRC allows a simplified method where you claim a flat rate based on the number of hours you work from home each month.

The appropriate option depends on your situation and how much of your home is used for business purposes.

Can sole traders claim food and meals?

Everyday meals are normally considered a personal expense and cannot usually be claimed.

However, meals may sometimes be allowable if they are part of a business trip, such as travelling to meet a client or attending a work event away from your usual working location.

The key factor is whether the cost is necessary for the business rather than a normal personal expense.

Expenses that cannot normally be claimed

Some costs are not considered allowable even if they are loosely connected to work.

Examples include personal expenses, everyday clothing, fines or penalties, and most general living costs.

If something is used partly for personal reasons and partly for business, only the business portion can be claimed.

How expenses reduce your tax bill

Expenses reduce the profit that your tax is calculated on.

For example:

Income: £50,000
Expenses: £12,000

Taxable profit: £38,000

If you fail to record legitimate expenses, your reported profit will appear higher and you may pay more tax than necessary.

This is why good record keeping throughout the year is important for sole traders.

Common mistakes sole traders make

Many self-employed people make simple mistakes when tracking their expenses.

Common issues include not keeping receipts, forgetting to track mileage, mixing personal and business spending, or missing legitimate deductions.

Some sole traders also leave their bookkeeping until the end of the tax year, which makes it much harder to remember expenses accurately.

Keeping organised records throughout the year can make self assessment much simpler and reduce the risk of errors.

Getting help with your accounts

As your business grows, managing bookkeeping and tax returns can become more time consuming.

An accountant can help ensure that expenses are recorded correctly, that your tax return is accurate, and that you are claiming everything you are entitled to.

If you are unsure whether you are claiming the right expenses or would like support with your self assessment, Taxity can help with straightforward accounting and tax services.

Frequently asked questions

Do sole traders need to keep receipts?

Yes. HMRC requires businesses to keep records supporting income and expenses for at least five years after the 31 January submission deadline.

Can sole traders claim clothing?

Normal everyday clothing cannot usually be claimed. However, uniforms or protective clothing required for work may qualify as an allowable expense.

Can sole traders claim equipment?

Yes. Equipment used for business purposes can usually be claimed, although some larger purchases may need to be treated as capital allowances.

Looking for Specialist E-commerce Accountant advice? See here: ecommerce-accountant

Need help with your self assessment tax return? Visit https://taxity.co.uk or get in touch for advice. See our full services, here.

Wondering if you need an accountant? Read our blog https://www.taxity.co.uk/blog/5-signs-your-small-business-needs-an-accountant-in-the-uk/