Sole Trader Allowable Expenses: Full HMRC List 2026/27

Running a business as a sole trader means you pay Income Tax on your taxable profits rather than simply on your total business income. Understanding sole trader allowable expenses can therefore help you calculate your taxable profit correctly and avoid paying tax on genuine business costs.

HMRC generally allows expenses that are incurred wholly and exclusively for the purposes of the trade, subject to specific rules. Where an expense has both business and private use, the allowable business proportion may need to be calculated. HMRC’s Business Income Manual (BIM) provides detailed guidance on this principle and how it applies to different types of expenditure.

This guide provides a practical self employed expenses list UK sole traders can use when reviewing their records for the 2026/27 tax year.

What Are Sole Trader Allowable Expenses?

Sole trader allowable expenses are qualifying costs that can be deducted when calculating taxable trading profits.

For example, if a business has £50,000 turnover and £10,000 of allowable business expenses, its taxable trading profit may be £40,000 before other adjustments and reliefs.

The important point is that paying for something through a business bank account does not automatically make it deductible. The expense must meet HMRC’s rules and relate to the trade.

HMRC’s BIM guidance explains the wholly and exclusively test. Where expenditure has both business and private purposes, the relevant business element may be deductible if it can be identified and reasonably apportioned.

Quick List of Allowable Expenses for Sole Traders

HMRC’s guidance covers office costs, premises, travel, staff, advertising, professional fees, financial costs and other business expenses.

1. Office and Administrative Expenses

Office costs are some of the most common sole trader allowable expenses.

You may be able to claim:

• Stationery
• Printing and photocopying
• Postage
• Printer ink
• Business software
• Business telephone costs
• Business internet costs
• Office subscriptions
• Small office equipment

HMRC’s guidance includes telephone, internet, postage, stationery, printing and qualifying software within business office costs.

For mixed-use services such as a mobile phone or internet connection, you should normally identify and claim only the appropriate business element.

2. Stock, Materials and Goods for Resale

If you sell products or use materials to provide services, the relevant business costs can generally be deducted.

Examples include:

• Products purchased for resale
• Raw materials
• Components
• Packaging
• Consumables
• Materials used for customer projects

The exact treatment depends partly on whether you use traditional accounting or the cash basis. HMRC provides separate guidance on calculating taxable profits under each method.

3. Business Premises and Utilities

If you operate from commercial premises, qualifying costs can include:

• Rent
• Business rates
• Electricity
• Gas
• Water
• Heating
• Business premises insurance
• Repairs and maintenance
• Security costs

However, buying or improving property may be treated as capital expenditure rather than an ordinary revenue expense. The distinction is important because capital costs may be dealt with under capital allowances or other tax rules.

4. Working From Home

Home-based businesses may be able to claim a reasonable business proportion of household costs.

Potential costs include:

• Electricity
• Gas
• Heating
• Council Tax
• Rent
• Mortgage interest
• Internet
• Telephone costs

HMRC’s BIM guidance explains how household costs can be apportioned where a home is used partly for business.

Eligible sole traders may also use simplified expenses. For 2026/27, HMRC’s simplified home-working rates are £10 per month for 25–50 hours of business use, £18 for 51–100 hours and £26 for 101 or more hours.

5. Travel and Mileage

Travel is an important part of a self employed expenses list UK sole traders should review carefully.

Qualifying business travel may include:

• Train and bus fares
• Taxi fares
• Air travel
• Hotel accommodation
• Parking
• Tolls
• Business mileage

Travel from home to a permanent workplace is generally treated differently from qualifying business journeys. HMRC’s Business Income Manual provides detailed guidance on ordinary commuting and business travel.

2026/27 Simplified Mileage Rates

Keep a mileage record showing the date, destination, business purpose and miles travelled.

6. Insurance

Business insurance can generally qualify where the policy relates directly to the trade.

Examples include:

• Public liability insurance
• Professional indemnity insurance
• Business premises insurance
• Business equipment insurance
• Trade-specific insurance

Personal insurance policies should not be treated as business expenses simply because the owner is self-employed.

7. Advertising and Marketing

Marketing costs are generally deductible where they are genuinely incurred for the business.

Examples include:

• Google advertising
• Social media advertising
• Business cards
• Flyers
• Website costs
• Promotional materials
• Directory listings
• Certain promotional samples

The cost should have a genuine business purpose and should not represent private expenditure.

8. Professional and Accountancy Fees

Business-related professional fees may include:

• Accountant fees
• Solicitor fees
• Surveyor fees
• Professional consultancy
• Business-related legal advice

However, not every professional cost qualifies. HMRC states that the cost of preparing and submitting your Self Assessment tax return is not an allowable deduction against trading profits.

9. Bank Charges and Financial Costs

Financial costs can also form part of sole trader allowable expenses.

Potentially qualifying costs include:

• Business bank charges
• Business credit card charges
• Overdraft charges
• Interest on business loans
• Certain hire purchase interest
• Relevant finance costs

The repayment of borrowed capital is different from interest. The loan principal itself is not simply an allowable business expense.

10. Staff and Subcontractor Costs

If you employ staff or use subcontractors, qualifying costs can include:

• Employee wages
• Employer National Insurance
• Staff pension contributions
• Agency fees
• Subcontractor payments
• Certain employee benefits

Your own drawings or money taken from the business for personal use are not business expenses.

11. Clothing and Uniforms

When considering what can I claim as self employed, clothing is an area where mistakes are common.

Ordinary everyday clothing is generally not deductible, even if you wear it while working.

However, certain business clothing can qualify, including:

• Uniforms
• Protective clothing
• Specialist clothing required for the trade

The fact that clothing is worn during working hours does not by itself make it an allowable expense.

12. Training and Professional Development

Training may qualify where it updates or maintains knowledge and skills relevant to the existing trade.

Examples can include:

• Refresher courses
• Technical training
• Professional development
• Industry-specific courses

Training that relates to starting an entirely new trade or acquiring a completely new skill can require different treatment, so the circumstances should be checked before claiming.

13. Equipment, Tools and Capital Costs

Equipment needs particular attention because the treatment depends on the accounting method and nature of the purchase.

Under traditional accounting, qualifying equipment, machinery and vehicles are generally dealt with through capital allowances rather than simply deducting the purchase price as an ordinary expense.

Under the cash basis, many qualifying capital items can instead be deducted as business expenses, although exclusions and specific rules apply.

This distinction is particularly relevant when buying computers, machinery, tools or other expensive equipment.

Common Mistakes We See Clients Make

A detailed self employed expenses list UK is useful, but understanding the rules behind each category is even more important.

Claiming Personal Expenses

Some sole traders assume that anything paid from a business account is deductible. It is not. The payment method does not determine whether an expense is allowable.

Claiming 100% of Mixed-Use Costs

A phone, vehicle, internet connection or home may have both business and private use. Claiming the entire cost without considering the private element can result in an incorrect deduction.

Treating Commuting as Business Travel

Travelling from home to a regular workplace is not automatically a business journey. HMRC’s BIM guidance distinguishes ordinary commuting from qualifying business travel.

Claiming Client Entertainment

Taking a customer to dinner may feel like a business cost, but client and customer entertaining is generally not an allowable deduction against trading profits.

Claiming Loan Repayments

The full monthly loan payment should not simply be entered as an expense. The treatment of interest and capital repayment is different.

Ignoring Capital Costs

A laptop, vehicle or piece of machinery may need to be treated under capital allowance or cash-basis rules rather than as an ordinary revenue expense.

Using the Trading Allowance and Actual Expenses Together

The £1,000 trading allowance is an alternative method for eligible businesses. You generally cannot use the trading allowance and then deduct actual expenses from the same income.

How to Keep Better Expense Records

Good records make claiming sole trader allowable expenses much easier.

Keep:

• Receipts and invoices
• Bank statements
• Mileage logs
• Business travel records
• Utility bills
• Insurance documents
• Software subscription invoices
• Professional fee invoices
• Evidence supporting mixed-use calculations

HMRC requires self-employed businesses to keep records of sales, income, expenses and other relevant financial information.

For mixed-use expenses, record how you calculated the business proportion. A clear calculation is easier to support than an unexplained estimate.

What Can I Claim as Self Employed?

When asking what can I claim as self employed, review these categories:

• Office and stationery costs
• Business phone and internet
• Stock and materials
• Premises costs
• Home-working expenses
• Qualifying travel and mileage
• Business insurance
• Advertising and marketing
• Professional fees
• Bank and finance charges
• Staff and subcontractor costs
• Qualifying work clothing
• Relevant training
• Software and subscriptions
• Repairs and maintenance
• Qualifying equipment and capital allowances

The central test remains whether the cost is connected with the trade and satisfies the relevant HMRC rules. The Business Income Manual provides detailed guidance on the wholly-and-exclusively test, travel, household expenses and other categories.

For sole traders with mixed personal and business spending, accurate records and reasonable apportionment are particularly important.

Top Bookkeeping Services can help sole traders organise bookkeeping records, maintain expense documentation and prepare accurate records for Self Assessment.

Conclusion

Understanding sole trader allowable expenses helps you calculate taxable profit accurately and avoid claiming costs that do not meet HMRC’s rules. Common qualifying expenses include office costs, travel, insurance, professional fees, marketing, home-working expenses and certain equipment.

Keep proper records, separate personal and business costs, and apply the correct rules to mixed-use expenses. Reviewing expenses throughout the year can make Self Assessment easier and help you avoid missing legitimate deductions.

For practical bookkeeping support, Top Bookkeeping Services can help sole traders maintain organised financial records and prepare for tax reporting.

Frequently Asked Questions 

What expenses can a sole trader claim in 2026/27?

Sole traders can generally claim qualifying business costs such as office expenses, business travel, insurance, professional fees, advertising, staff costs, stock, utilities and certain home-working expenses. The expense must meet HMRC’s relevant rules.

Can I claim expenses if I work from home as a sole trader?

Yes. You may be able to claim a reasonable business proportion of household costs or use HMRC’s simplified home-working expenses if you meet the conditions.

Can sole traders claim mileage expenses?

Yes. Sole traders can use HMRC’s approved mileage rates for qualifying business journeys where the relevant conditions are met. Ordinary commuting is generally treated differently from business travel.

Can I claim clothing as a self-employed expense?

Only certain work-related clothing can qualify. Uniforms, protective clothing and specialist clothing required for the trade may be allowable, while ordinary everyday clothing is generally not deductible.

What expenses can a sole trader not claim?

Common non-allowable costs include personal expenses, ordinary commuting, most client entertaining, fines and penalties, and ordinary everyday clothing. Mixed-use costs also require the private element to be excluded.