Sole Trader UK: Setup, Tax, NI and Day-to-Day EssentialsSelf-Employed Expenses You Can Claim UK 2026 — Complete List
Full list of allowable business expenses for self-employed and sole traders in the UK. What you can claim, how to claim it, and records you need.
If you want a complete route through sole-trader setup, tax, NI, and day-to-day operations, use the Sole Trader Hub as your main guide.
Claiming the right expenses reduces your tax bill. Here’s everything self-employed people and sole traders can claim in the UK.
How Business Expenses Work
| Term | Meaning |
|---|
| Allowable expense | Cost you can deduct from income |
| Wholly and exclusively | Must be 100% for business |
| Tax relief | Less taxable profit = less tax |
Tax Savings Example
| Situation | Without Claiming | With £5,000 Expenses |
|---|
| Income | £40,000 | £40,000 |
| Taxable profit | £40,000 | £35,000 |
| Tax saved (20%) | — | £1,000 |
Every £100 of allowable expenses saves £20-45 in tax depending on your rate.
Office and Premises Costs
| Expense | Claimable | Notes |
|---|
| Rent for business premises | Yes | Full amount |
| Utilities (business premises) | Yes | Full amount |
| Business rates | Yes | Full amount |
| Office furniture | Yes | Or capital allowances |
| Stationery | Yes | Paper, pens, etc. |
| Printing and postage | Yes | Business-related only |
| Computer equipment | Yes | Business use portion |
| Software subscriptions | Yes | Business tools only |
Working from Home
You can claim a proportion of home costs:
| Method | How It Works |
|---|
| Simplified expenses | Flat rate based on hours worked |
| Actual costs | Calculate proportion used for business |
Simplified Expenses (Flat Rate)
| Hours Worked from Home | Monthly Amount |
|---|
| 25-50 hours | £10 |
| 51-100 hours | £18 |
| 101+ hours | £26 |
Annual example: 101+ hours/month × 12 = £312/year
Actual Costs Method
Calculate percentage of home used for business:
| Expense | Total Cost | Business Use (10%) |
|---|
| Mortgage interest/rent | £12,000 | £1,200 |
| Council tax | £1,800 | £180 |
| Utilities | £2,400 | £240 |
| Insurance | £300 | £30 |
| Total claimable | | £1,650 |
Travel Expenses
| Expense | Claimable | Notes |
|---|
| Business travel (public transport) | Yes | Trains, buses, taxis |
| Business travel (own car) | Yes | Mileage or actual costs |
| Parking (business) | Yes | Not fines |
| Accommodation (business trips) | Yes | Reasonable cost |
| Subsistence (overnight trips) | Yes | Food when away |
| Congestion charges (business) | Yes | London, etc. |
Car Expenses
| Method | How It Works |
|---|
| Simplified mileage | Flat rate per mile |
| Actual costs | Fuel, insurance, repairs, depreciation |
Simplified Mileage Rates
| Vehicle Type | First 10,000 Miles | Above 10,000 Miles |
|---|
| Car/van | 45p | 25p |
| Motorcycle | 24p | 24p |
| Bicycle | 20p | 20p |
Example: 8,000 business miles × 45p = £3,600 claimable
What Counts as Business Travel
| Journey | Claimable? |
|---|
| Home to regular workplace | No (commuting) |
| Workplace to client site | Yes |
| Home to temporary workplace | Yes (if irregular) |
| Business meeting travel | Yes |
| Training course travel | Yes |
You cannot claim commuting from home to a regular place of work.
Staff Costs
| Expense | Claimable | Notes |
|---|
| Employee salaries | Yes | Gross amount |
| Employer’s National Insurance | Yes | Full amount |
| Pension contributions (employer) | Yes | Into employee pensions |
| Subcontractor/freelancer payments | Yes | For business services |
| Recruitment costs | Yes | Advertising, agency fees |
| Staff training | Yes | Job-related training |
| Staff gifts | Partially | Max £50/employee/year tax-free |
Marketing and Sales
| Expense | Claimable | Notes |
|---|
| Advertising | Yes | Online, print, etc. |
| Website costs | Yes | Hosting, design, domain |
| Business cards | Yes | Design and printing |
| Promotional materials | Yes | Flyers, brochures |
| Trade shows | Yes | Exhibition stands, fees |
| Samples | Yes | Given to potential customers |
| PR and marketing services | Yes | Agency or freelancer fees |
Professional Services
| Expense | Claimable | Notes |
|---|
| Accountancy fees | Yes | Tax returns, accounts |
| Legal fees (business) | Mostly | Not for buying property |
| Professional subscriptions | Yes | Relevant to your trade |
| Trade body memberships | Yes | Industry associations |
| Regulatory fees | Yes | Licences, registrations |
| Consultancy fees | Yes | Business advice |
Insurance
| Expense | Claimable | Notes |
|---|
| Professional indemnity | Yes | Full amount |
| Public liability | Yes | Full amount |
| Employers’ liability | Yes | Required if you have staff |
| Business premises insurance | Yes | Full amount |
| Equipment/stock insurance | Yes | Business assets |
| Business vehicle insurance | Yes | Or proportion for mixed use |
Not claimable: Personal insurance like life insurance or private health insurance.
Financial Costs
| Expense | Claimable | Notes |
|---|
| Bank charges (business account) | Yes | Monthly fees, transaction costs |
| Interest on business loans | Yes | Not the capital repayment |
| Credit card interest (business) | Yes | Business purchases only |
| Invoice factoring costs | Yes | Fee charged |
| Bad debts | Yes | Invoices you can’t collect |
| Card processing fees | Yes | Stripe, PayPal, etc. |
Training and Development
| Expense | Claimable | Notes |
|---|
| Training courses (job-related) | Yes | Improving existing skills |
| Industry conferences | Yes | Seminars, workshops |
| Books and publications | Yes | Relevant to your work |
| Online courses | Yes | Business-related only |
Not claimable: Training for a completely new career or qualifications that let you do something different.
What You Cannot Claim
| Expense | Why Not Claimable |
|---|
| Personal expenses | Not for business |
| Everyday clothing | Personal choice |
| Daily food/lunch | You’d eat anyway |
| Fines and penalties | Public policy |
| Client entertainment | Specifically excluded |
| Home to work commuting | Personal travel |
| Personal phone bill | Unless you apportion |
| Gym membership | Personal fitness |
| Childcare | Personal expense |
Mixed Use Expenses
For items with both personal and business use, claim only the business proportion.
| Item | Approach |
|---|
| Mobile phone | Claim % of business calls or get business contract |
| Internet | Claim % used for business |
| Computer | Claim % of business use |
| Vehicle | Claim business mileage only |
Record Keeping Requirements
What to Keep
| Record | Retention Period |
|---|
| Receipts | 6 years |
| Invoices (sales and purchases) | 6 years |
| Bank statements | 6 years |
| Mileage log | 6 years |
| Contracts | 6 years |
Good Record Keeping
| Practice | Why It Matters |
|---|
| Digital copies | Backup if originals lost |
| Organised by date/category | Easier for tax returns |
| Mileage log | HMRC expects details |
| Separate business account | Clear business transactions |
Simplified Expenses Summary
| Category | Simplified Rate |
|---|
| Working from home | £10-£26/month |
| Vehicle mileage | 45p/25p per mile |
| Living on business premises | Flat rate deduction |
Simplified expenses are easier but may give you less relief than actual costs. Calculate both to see which benefits you more.
Common Mistakes to Avoid
| Mistake | Consequence |
|---|
| Claiming personal expenses | HMRC penalties |
| No receipts | Expense disallowed |
| Claiming commuting | Not allowable |
| Round number estimates | Looks suspicious |
| Overclaiming | Investigation risk |
| Missing legitimate expenses | Paying too much tax |
How to Claim Expenses
Self Assessment Tax Return
- Keep records throughout the year
- Calculate total expenses by category
- Enter on self-employment pages (SA103)
- Use simplified or actual costs consistently
- Keep records for 6 years
Using Accounting Software
Software like FreeAgent, Xero, or QuickBooks can:
- Track expenses automatically
- Categorise correctly
- Calculate simplified expenses
- Generate tax return figures
Summary
| Category | Examples |
|---|
| Office | Rent, utilities, stationery, equipment |
| Travel | Mileage, public transport, accommodation |
| Professional | Accountant, legal, subscriptions |
| Marketing | Advertising, website, materials |
| Financial | Bank fees, loan interest, bad debts |
| Insurance | Professional, liability, premises |
Claiming all legitimate expenses reduces your tax bill legally. Keep good records, claim only genuine business costs, and get an accountant if you’re unsure.