Self Assessment
What expenses can a sole trader claim? The complete HMRC guide
Updated May 2026 · 10 minute read
Allowable expenses reduce your taxable profit. If you earn £40,000 and have £8,000 of allowable expenses, you pay tax on £32,000 — not £40,000. Getting this right is one of the most valuable things you can do for your Self Assessment return.
The golden rule
An expense is allowable if it is incurred "wholly and exclusively" for the purposes of your trade. Mixed-use items (a phone you use for both work and personal calls) can only be claimed proportionally.
HMRC does not require you to submit receipts with your return, but you must keep them for five years after the 31 January submission deadline in case of enquiry.
The 11 HMRC expense categories
1. Office, property and equipment
Rent for business premises, business rates, water rates, utility bills for business premises. If you work from home, see the home office section below.
2. Car, van and travel
Business mileage (45p per mile for first 10,000 miles, 25p thereafter), public transport for business travel, parking, road tolls. Commuting from home to a regular workplace is not allowable.
3. Clothing
Protective or safety clothing, uniforms, or costumes required for work. Regular clothing — even if you only wear it for work — is not allowable. A suit is not a uniform.
4. Staff costs
Wages, salaries, and employer National Insurance contributions for employees. Subcontractor costs. Your own drawings are not an expense.
5. Reselling goods
Stock or raw materials bought for resale. Cost of goods sold. For Etsy and eBay sellers, this is your manufacturing cost, sourcing cost, or wholesale price.
6. Legal and financial costs
Accountancy fees, legal fees for business contracts, bank charges on business accounts, insurance premiums. Personal legal costs are not allowable.
7. Marketing, entertainment and subscriptions
Advertising and marketing costs, website hosting, business subscriptions and trade journals. Client entertainment is generally not allowable — HMRC is strict on this.
8. Training and courses
Training that maintains or improves skills in your existing trade. A copywriter doing an advanced writing course: allowable. The same copywriter doing a photography course: not allowable (it is a new skill).
9. Phone, mobile, broadband and software
Business proportion of phone and broadband bills. Software subscriptions used wholly for business (Notion, Figma, Adobe Creative Cloud, etc.). If you use your phone 50% for business, you can claim 50% of the bill.
10. Financial charges
Bank charges, credit card charges on business transactions, merchant fees (Stripe, PayPal, Gumroad fees on sales). Interest on business loans.
11. Use of home as office
Two options: HMRC flat rate (£6 per week for 25–50 hours, £10 for 51–100 hours, £18 for over 101 hours) or actual cost calculation based on the proportion of your home used for work. The flat rate is simpler; the actual cost method is usually higher for those with a dedicated home office.
What you cannot claim
- -Everyday clothing, even if worn only for work
- -Client entertaining and hospitality
- -Fines and penalties (including HMRC penalties)
- -Your own salary or drawings from the business
- -Personal expenditure, even if incurred during a business trip
- -Training for a new trade or profession
Tallied Self Assessment + MTD Tracker
The Tallied expense tracker has all 11 HMRC categories pre-built as select options. Every expense entry gets a category automatically — and a receipt saved checkbox for audit readiness. Your quarterly expense totals roll up automatically.
See the template — £35 →