Self-employed expenses: what you can claim
The short answer: you can deduct any cost that is wholly and exclusively for your business. Common ones are stock and materials, equipment, business travel, phone and internet, insurance, advertising, professional fees and a share of home costs. Every £1,000 of allowable expenses saves a basic-rate sole trader about £260 in tax and National Insurance. On £40,000 of turnover, claiming £5,000 of expenses cuts the bill by £1,300.
Allowable expenses at a glance
| Category | Usually allowed | Not allowed |
|---|---|---|
| Office and equipment | Stationery, software, computers, phones, printers | Private use share |
| Travel | Fuel or mileage for business trips, train fares, parking, hotels away on business | Commuting to a regular workplace, fines |
| Clothing | Uniforms, protective wear, costumes | Everyday clothes |
| Staff | Wages, employer NI, pension contributions, subcontractors | Your own drawings |
| Stock and materials | Goods for resale, raw materials | Items for personal use |
| Professional costs | Accountant, insurance, bank charges on business accounts | Fines, penalties |
| Marketing | Website, advertising, business cards | Entertaining clients |
| Training | Courses that update existing skills | Training for a new line of business |
Working from home
You have two choices:
- Actual costs: a reasonable share of heating, electricity, broadband, council tax, rent or mortgage interest, based on the rooms used and time spent working. Keep your workings.
- Flat rate: a set monthly amount based on hours worked at home:
| Hours worked at home a month | Flat rate a month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
The flat rate covers heat and light; you can still claim a business share of phone and internet on top. Claiming part of your home as used only for business can affect Capital Gains Tax if you sell, so most people avoid that.
Cars and vans
Use either simplified mileage or actual costs, and stick with it for that vehicle:
- Mileage: 55p a mile for the first 10,000 business miles, then 25p. 6,000 business miles is £3,300.
- Actual costs: the business share of fuel, insurance, repairs, road tax and finance interest, plus capital allowances on the vehicle.
Keep a mileage log with dates, journeys and reasons.
Equipment and capital allowances
Most sole traders use the cash basis, where equipment such as a laptop or tools is simply deducted when you pay for it. Cars are the exception: you claim capital allowances over time instead, at a rate based on CO₂ emissions. Items used privately as well are claimed only for the business share.
Trading allowance instead
If your expenses are under £1,000, you can deduct the £1,000 trading allowance instead. If your total turnover is £1,000 or less, you don't need to declare it at all. The allowance rises to £3,000 from April 2027.
What claiming saves
| £40,000 turnover | No expenses | £5,000 expenses |
|---|---|---|
| Profit | £40,000 | £35,000 |
| Income Tax | £5,486 | £4,486 |
| Class 4 National Insurance | £1,646 | £1,346 |
| Total bill | £7,132 | £5,832 |
A higher-rate taxpayer saves about 42p per pound of expenses. Never spend money just to get the deduction; it only returns part of the cost.
Records
Keep receipts, invoices and bank statements for at least five years after the 31 January filing deadline. From April 2026, if your self-employed and property income is over £50,000, Making Tax Digital requires digital records and quarterly updates. If you also have a job, see tax when employed and self-employed, and for the bigger picture, sole trader vs limited company.
Expenses people get wrong
- Phone and broadband: claim only the business share. If half your calls and data are for work, claim half the bill.
- Food: everyday lunches don't count. Meals are allowed only when you travel away from your usual place of work for business.
- Client entertaining: never allowed, even if it wins business.
- Gifts to clients: allowed only if they carry your business name and cost no more than £50 per person a year, and aren't food, drink or tobacco.
- Your own wages: money you take out is not an expense; you are taxed on the profit.
- Gym memberships and everyday clothes: not allowed, even for personal trainers who wear the clothes at work.
If you claim too much
HMRC can check returns for up to four years, or longer if it thinks you were careless. If you have claimed expenses you can't support, you'll pay the extra tax, interest and possibly a penalty. Keep a receipt or bank record for everything you claim, and a short note for anything that isn't obvious.
Rules for sole traders in 2026/27. This is general information, not tax advice.
Common questions
What expenses can I claim as self-employed?
Costs you have only to run your business, such as stock, materials, tools, business travel, phone and internet for work, insurance, advertising, accountancy fees, and part of your home costs if you work from home.
How much tax does claiming expenses save?
Each pound of allowable expenses reduces your profit, so it saves tax at your marginal rate. A basic-rate sole trader saves about 26p per pound: 20% Income Tax and 6% Class 4 National Insurance.
Can I claim mileage if I am self-employed?
Yes. You can use the approved rate of 55p a mile for the first 10,000 business miles and 25p after that, instead of claiming actual vehicle costs. Commuting to a regular workplace does not count.
Should I use the £1,000 trading allowance or claim expenses?
Use the £1,000 trading allowance if your expenses are less than £1,000. If they are more, claim actual expenses instead. You cannot do both.
Can I claim clothes as a business expense?
Only uniforms, protective clothing or costumes needed for your work. Everyday clothing, even if you only wear it for work, is not allowed.