Guides

Allowable expenses for sole traders

Checked against GOV.UK on 18 October 2026

General guidance taken from GOV.UK, not advice about your own tax affairs. HMRC's rules change, so the GOV.UK pages listed at the end are the final word.

Allowable expenses are the running costs of your business. You take them away from your turnover to work out your taxable profit, and you pay Income Tax on that profit. With £40,000 of turnover and £10,000 of allowable expenses, you pay Income Tax on £30,000.

Two things never count: money you take out of the business for yourself, and any expense at all if you use the £1,000 tax-free trading allowance instead.

What you can claim

GOV.UK groups allowable expenses like this.

  • Office, property and equipment — stationery, phone, mobile and internet bills, postage, printing and ink; software your business uses for less than 2 years, or whose licence you renew with regular payments; rent for business premises, business and water rates, utilities, property insurance and security; repairs and maintenance of premises and equipment.
  • Car, van and travel — vehicle insurance, repairs and servicing, fuel, parking, hire charges, vehicle tax and breakdown cover; train, bus, tram, air and taxi fares; hotel rooms, and meals on overnight business trips.
  • Clothing — only protective clothing such as safety boots or hard hats, overalls or aprons you only wear for work, uniforms that aren't everyday clothing, and costumes for acting, entertaining or advertising.
  • Staff — salaries, bonuses, pensions and benefits, agency fees, subcontractors, employer's National Insurance, and training related to your business.
  • Things you sell — stock, raw materials, and the direct costs of producing goods.
  • Legal and financial — accountants, solicitors, surveyors and architects hired for business reasons; professional indemnity and other business insurance, such as public liability; bank, overdraft and credit card charges; interest on business loans; hire purchase interest and leasing payments.
  • Marketing — advertising, mailshots and website costs; free samples of things you sell; and promotional items carrying your business name or logo, up to £50 per recipient per tax year (but not food, drink or tobacco).
  • Subscriptions — trade or professional journals, and membership of a trade body or professional organisation related to your business.
  • Training — courses that improve skills you already use in your business, keep you up to date with technology used in your industry, or help you develop skills to support the business, including administrative skills.

Equipment and vehicles

Under cash basis, which is the default, equipment you buy and keep for the business — computers, printers, vans — is an allowable expense. A car is the exception: you claim its cost as a capital allowance, unless you use simplified expenses for it. Under traditional accounting, equipment and vehicles are capital allowances.

Costs you also use privately

You can only claim the business part.

  • A mobile phone: £200 of bills, of which £70 was business calls — you claim £70.
  • Working from home: you can claim a share of heating, electricity, Council Tax, mortgage interest or rent, and internet and phone use. Divide them in a reasonable way, such as by rooms or by time. GOV.UK's example: one of 4 rooms used only as an office, with a £1,120 electricity bill, gives £280. If you worked from home only one day a week, that becomes £40.

Simplified expenses are flat rates you can use instead of these calculations, for vehicles, working from home, and living on your business premises.

What you cannot claim

  • everyday clothing, such as suits, shirts or ordinary shoes, even if you wear them for work
  • travel between home and work, and any non-business driving or travel
  • fines and penalty charges, including fines for breaking the law
  • carers or domestic help, such as nannies
  • goods or materials bought for private use
  • depreciation of equipment
  • the cost of preparing and submitting your Self Assessment tax return
  • repayments of loans, overdrafts or finance arrangements
  • the legal costs of buying property and machinery (under traditional accounting, these are capital allowances)
  • entertaining clients, suppliers or customers — hospitality, venue hire, event tickets — and food or drink for them, such as a working lunch
  • gym membership, payments to political parties, and donations to charity (sponsorship may be claimable)
  • bad debts, if you use cash basis, because you only ever record money you've actually received

Under traditional accounting, a bad debt can be claimed if you included it in your turnover and you're sure you'll never recover it.

Common questions

Can I claim my lunch?

Usually not. HMRC's manual says the cost of food and drink is not in general a business expense, "since everyone must eat in order to live". Working away from home doesn't change that: the extra cost of buying lunch out can't be split off as a business part either.

There are exceptions for business travel:

  • Overnight business trips — if a trip needs one or more nights away from home, the hotel and reasonable meals are allowable.
  • Occasional journeys — reasonable food and drink while travelling on business to somewhere you only go occasionally, outside your normal pattern of travel, or if your trade itself is itinerant.

Food and drink for clients is usually not allowable either; food and drink for your employees is.

Can I claim travel?

Business journeys, yes — fuel, fares, parking and the other costs listed above. Travel between home and your place of work, no.

Can I claim medical costs?

Generally not. HMRC's manual says "medical expenditure on ensuring or restoring good health is not generally allowable" — even when the illness came from your work.

Keep the proof

Tell HMRC your allowable expenses on your tax return. You don't send receipts with it, but you must keep records of all your business expenses, and make sure they're accurate, in case HMRC asks to see them. If you're not sure whether something is allowable, GOV.UK's advice is to ask HMRC.

Sources