Self-Employment Tax UK 2026/27 — Income Tax, National Insurance, Expenses and IR35

Self-Employed Allowable Expenses UK — What Can You Claim?

A comprehensive list of tax-deductible expenses for the self-employed in the UK. Know what you can and can't claim to reduce your tax bill legally.

Tax information is based on HMRC rules for the 2026/27 tax year. Tax rules can change — always verify current rates at GOV.UK. This is not tax advice. Consider consulting a qualified tax adviser for your personal situation.

One of the biggest advantages of being self-employed is the ability to deduct legitimate business expenses from your income before tax is calculated. Every pound you claim in allowable expenses reduces your taxable profit — and therefore the amount of income tax and National Insurance you pay.

This guide lists everything you can (and can’t) claim as a sole trader or freelancer, so you can minimise your tax bill legally and confidently.

The Golden Rule

For an expense to be allowable, it must be incurred “wholly and exclusively” for the purposes of your business. If something has a mixed personal and business use (such as a mobile phone), you can claim the business proportion only.

You don’t need to send receipts to HMRC with your tax return, but you must keep records for at least five years in case of an enquiry.

Allowable Expenses by Category

Office, Property & Equipment

ExpenseNotes
Office or workshop rentBusiness premises only
Business ratesOn your business premises
Utilities (gas, electric, water)Business premises, or business proportion of home costs
Repairs and maintenanceTo business premises or equipment
Stationery and office suppliesPaper, ink, postage, etc.
Computer equipment and softwareLaptops, monitors, accounting software
Telephone and broadbandBusiness proportion if shared with personal use
Cleaning costsFor business premises

For items costing over a few hundred pounds — such as computers, machinery, or vehicles — you may need to use capital allowances rather than deducting the full cost in one year (see below).

Travel

ExpenseAllowable?
Business mileage (own vehicle)✓ 45p per mile for first 10,000 miles, 25p thereafter (simplified)
Actual vehicle costs✓ Fuel, insurance, repairs, road tax — business proportion only
Parking for business trips
Public transport for business✓ Train, bus, taxi fares
Hotels and meals on business trips✓ Reasonable overnight costs
Home-to-regular-workplace commuting✗ Not allowable
Congestion charges for business trips

Important: You must choose either the simplified mileage rate or actual vehicle costs for each vehicle — you cannot mix and match. Once you’ve claimed actual costs for a vehicle, you must continue using that method for as long as you use the vehicle for business.

Staff Costs

ExpenseNotes
Employee salaries and wagesIncluding your own staff
Subcontractor paymentsNet of any CIS deductions
Employer’s National InsuranceYour share of NI for employees
Staff pension contributionsEmployer contributions
Staff trainingFor existing employees
Recruitment costsAdvertising roles, agency fees

Financial Costs

ExpenseNotes
Bank charges and feesBusiness accounts
Interest on business loansBusiness borrowing only
Hire purchase interestBusiness assets
Accountancy feesTax returns, bookkeeping
Legal and professional feesBusiness-related only (not personal disputes)
Business insurancePublic liability, professional indemnity, etc.
Bad debtsInvoices you’ve written off as unrecoverable

Marketing

ExpenseNotes
AdvertisingOnline, print, social media
Website costsHosting, domain, design, maintenance
Business cards and brochuresPrinted marketing materials
Trade directory listingsIncluding online directories
SponsorshipIf it promotes your business

Training and Development

ExpenseAllowable?
Courses related to your current trade✓ Updating skills you already use
Professional subscriptions✓ Trade bodies, journals
Books and reference materials✓ Related to your business
Training to enter a new profession✗ Not allowable

Working from Home

If you use part of your home for business, you can claim a proportion of your household costs. There are two methods:

Simplified flat rate (no evidence required):

Hours Worked from Home per MonthMonthly Flat Rate
25–50 hours£10
51–100 hours£18
101+ hours£26

Actual costs method: Calculate the business proportion of your rent or mortgage interest, council tax, utilities, broadband, and insurance. For example, if you use one room of a four-room house for business, you might claim 25% of those costs — adjusted for the hours you work.

Alternatively, you can claim the £6 per week simplified working-from-home allowance without needing to track hours.

Capital Allowances

For larger items that last more than a year — such as vehicles, machinery, computers, and tools — you claim the cost through capital allowances rather than as a simple expense.

  • Annual Investment Allowance (AIA): Deduct the full cost of qualifying items up to £1,000,000 per year. This covers most sole traders — you’d need to spend over a million pounds on equipment to hit the limit.
  • Writing Down Allowances: For amounts above the AIA or items not qualifying, you deduct a percentage of the remaining value each year (typically 18% or 6% depending on the type of asset).

Most sole traders will use the AIA to claim the full cost of equipment purchases in the year they buy them.

Simplified Expenses

HMRC offers simplified expenses — preset flat rates that remove the need for complex calculations. These are available for:

CategoryFlat Rate
Vehicles45p/mile (first 10,000), 25p/mile thereafter
Working from home£10–£26/month depending on hours (see above)
Living in business premises£350–£650/month depending on household size

Simplified expenses are optional. If your actual costs are higher, it’s worth calculating and claiming the real figures instead.

What You CAN’T Claim

These expenses are not allowable, no matter how business-related they may feel:

ExpenseWhy Not Allowable
Personal expensesNot exclusively for business
Entertaining clients or suppliersSpecifically disallowed by HMRC
Fines and penaltiesIncluding parking tickets, HMRC penalties
Your own salary (as a sole trader)Your profit IS your income — you can’t pay yourself a salary
Everyday clothingEven if only worn for work — unless a uniform or protective
Home-to-work commutingConsidered personal travel
Political donationsNot business-related
Charitable donationsClaim through Gift Aid on your personal return instead

Maximise Your Claims

  • Keep every receipt — Digital photos or scanned copies are fine. Use an app to capture them immediately.
  • Separate your bank accounts — A dedicated business account makes it far easier to identify and prove expenses.
  • Review this list before filing — Many sole traders leave money on the table by forgetting smaller claims like professional subscriptions, mileage, or working-from-home costs.
  • Use accounting software — Tools like FreeAgent, Xero, or QuickBooks categorise expenses automatically and flag common deductions.

Sources

  1. HMRC — Income Tax