What are allowable expenses for freelancers in the UK?

Understanding allowable expenses for UK freelancers

If you freelance in the UK—whether you’re a sole trader, a contractor, or running a small limited company—knowing what counts as an allowable business expense can make a real difference to your tax bill and your cash flow. Allowable expenses are costs you incur “wholly and exclusively” for the purposes of your trade. In plain English, that means the expense must be genuinely for your business, not primarily for personal life. Where something is used for both business and personal reasons, you can usually claim only the business portion.

This guide is designed to help freelancers make practical, sensible decisions about what can typically be claimed, what requires apportionment, what needs extra care, and what is commonly disallowed. It also covers record-keeping and real-world scenarios so you can apply the rules confidently to your own work.

The “wholly and exclusively” principle

The core test for most allowable expenses is that they must be incurred wholly and exclusively for business purposes. This doesn’t mean the expense has to be 100% business in every possible sense. It means the motive and purpose of the expense must be business-related. Where an item is partly business and partly personal, you usually can’t claim the full cost; you must split it in a fair and reasonable way and claim only the business element.

For example, if you use your mobile phone for client calls and personal calls, you can claim a portion of the bill. If you buy a laptop used mostly for client work but sometimes for personal browsing, you can claim the business proportion. The more clearly you can justify your split, the safer you are if questions arise.

It’s also worth noting that “wholly and exclusively” is not the same as “helpful for business.” Many expenses are helpful but still disallowed if they are essentially personal. Clothing is a common example: everyday clothing you happen to wear to work is generally not allowable, even if it helps you look professional. Uniforms or protective clothing may be allowable, but ordinary attire usually is not.

How allowable expenses reduce your tax

For most freelancers, allowable expenses reduce taxable profit rather than reducing tax directly. Your taxable profit is generally your business income minus allowable business expenses. Lower profit usually means lower Income Tax and National Insurance for sole traders. For limited companies, allowable expenses typically reduce the company’s taxable profit for Corporation Tax purposes. If you’re unsure which structure you operate under, it’s important to clarify because some rules and mechanics differ even when the underlying principle is similar.

It’s also crucial to understand the difference between deductible expenses (which reduce profit) and tax credits or reliefs (which reduce tax). Most of what freelancers claim are deductible expenses.

Common allowable expenses for freelancers

Below are categories of expenses that freelancers commonly incur and can often claim, subject to the business-purpose test and any required apportionment. Think of these as practical “buckets” rather than strict legal labels; the key is always whether the cost relates to your trade and is properly evidenced.

Office and working-from-home expenses

Many freelancers work from home, either full-time or part-time. You can typically claim the business portion of household costs that relate to your workspace. The most common categories include:

Utilities and household bills: A proportion of electricity, gas, water, and other utilities used while you work. If you have a dedicated office room used primarily for business, your business portion may be higher than if you work from a shared living space.

Broadband and phone: Broadband is often allowable in proportion to business use. If the broadband contract is in your name and you also use it personally, you should apportion. For mobile and landline phone bills, claiming the business percentage is common; itemised billing can help justify the split.

Rent or mortgage interest: You cannot usually claim the full rent or mortgage. However, if you work from home, you may be able to claim a proportion of rent or mortgage interest based on the area of your home used for business and the time it’s used for business. Note: claiming a portion of mortgage interest (not the capital repayment) is the typical approach; the details can be nuanced, particularly around capital gains implications if you designate space exclusively for business.

Council tax and home insurance: These may be apportioned where appropriate, again based on business use. Many freelancers choose a modest, defensible approach rather than overly aggressive splits.

Repairs and maintenance: If you have repairs that relate to the whole house, you might claim a portion. If repairs relate specifically to a room used as your office, that may increase the business element. Be careful here—big home improvements can raise complexity, and it’s usually sensible to keep your approach conservative and well documented.

Office furniture and equipment: Desk, chair, shelving, monitor stands, lighting for your workspace—these can often be allowable if purchased for business use. Whether you deduct the cost immediately or treat it as a capital allowance depends on the nature of the item and your accounting approach.

There are generally two practical ways freelancers handle home working claims: using simplified flat-rate methods (where available) or calculating actual costs and claiming a fair proportion. The “best” option depends on your circumstances and record-keeping tolerance.

Business premises, co-working, and studio space

If you rent a co-working desk, studio, workshop, or office, the cost is usually an allowable expense, provided the space is genuinely used for business. Typical allowable costs include:

Rent and service charges for the space, meeting room hire, utility charges billed by the provider, business rates where applicable, and security or access fees. If the membership includes perks (like gym access) that are personal in nature, you should be careful about whether any portion is disallowable or needs adjustment.

Travel and transport

Travel is one of the most common expense areas for freelancers—and one of the areas where mistakes happen. In general, travel must be for business purposes. Commuting to a regular place of work is often not allowable in the same way as travel to temporary client sites or business meetings.

Public transport: Train, bus, tram, underground, taxi, and ride-hailing fares can typically be claimed when the journey is for business (client meetings, site visits, business events, travel between work locations).

Car and van expenses: If you use your vehicle for business, you may claim either a simplified mileage rate (if you meet relevant conditions) or a proportion of actual running costs. Running costs include fuel, insurance, repairs, servicing, road tax, breakdown cover, and parking. The method you choose affects what you can claim and how you calculate it.

Parking and tolls: Parking for business trips and tolls for business journeys are typically allowable. Parking fines or penalties are not allowable.

Subsistence while traveling: If you have to travel for business and it is reasonable to incur meal costs, subsistence may be allowable. The key is the journey must be business-related and the subsistence must be a reasonable consequence of that travel, not simply your everyday lunch at home.

Accommodation: Hotel or other accommodation can be allowable if you need to stay overnight for business purposes (for example, a multi-day project far from home). Personal add-ons—like extending the trip for a holiday—should be separated and not claimed as business costs.

A useful habit is to keep a travel log: date, destination, client or purpose, and distance (if mileage). This turns a potentially messy expense area into something robust and easy to defend.

Meals, entertaining, and subsistence

Food-related expenses cause confusion because the rules differ depending on why you’re eating and who you’re with.

Subsistence (your own meals while traveling): Often allowable when you are traveling for business in a way that makes the expense necessary and reasonable. It’s not usually allowable for ordinary day-to-day meals that you would buy anyway, even if you happen to eat them while working.

Client entertaining: Taking a client out for a meal may be a legitimate business activity, but it is commonly treated as non-deductible for tax purposes in many contexts. Even when it is not deductible, you might still record it in your accounts separately so your records are accurate and you can track relationship-building costs.

Staff entertaining and team meals: If you employ staff, there can be different considerations, especially around staff welfare or staff events. Sole freelancers often don’t have “staff” in the relevant sense, but if you do have employees, this category can matter.

Because meals and entertaining often have tricky edges, it’s smart to label receipts clearly—write a note in your accounting app or on the receipt: “Lunch while traveling to client site in Manchester,” or “Coffee meeting with client to discuss project scope.” Clarity is your friend.

Professional fees, subscriptions, and memberships

Freelancers often rely on professional communities, tools, and guidance. Many of these costs are typically allowable when they relate to your trade.

Accountancy fees: Fees for accountants, tax advisers, and bookkeeping services are usually allowable business expenses. If you pay for personal tax advice unrelated to your business, you should separate it.

Legal fees: Legal costs connected with your business—contract reviews, debt recovery, business disputes—may be allowable. Legal fees to purchase a long-term asset or set up a business structure may be treated differently, and some may be capital in nature.

Professional body memberships: Memberships to trade associations, professional institutes, and regulatory bodies can often be claimed if relevant to your work.

Journals and trade publications: Subscriptions to trade journals, specialist magazines, or industry publications may be allowable where they’re relevant to your business activities.

Software subscriptions: Design tools, project management, accounting software, coding tools, cloud storage, communications platforms—these are usually straightforward allowable expenses when used for business. If you choose a plan that includes personal benefits, consider whether apportionment is appropriate.

Marketing, advertising, and sales costs

If you spend money to attract clients, promote your services, or build your brand, those costs are often allowable—provided they are genuinely business-related and not personal lifestyle spending dressed up as marketing.

Website costs: Domain registration, hosting, website themes, plugins, and web development fees are commonly allowable. If you build the site yourself and buy resources or tools specifically for that purpose, those can also be allowable.

Advertising: Online ads, sponsored social posts, directory listings, print ads, and promotional campaigns can be allowable. Keep invoices and campaign summaries where possible.

Branding and design: Paying for a logo, brand identity, photography for your portfolio, or design services is often allowable if used for business promotion.

Business cards and printed materials: Business cards, brochures, leaflets, and banners can be allowable.

Client proposals and pitching: Costs associated with producing proposals—graphics, printing, courier charges—can be allowable if they relate to pursuing business.

Training, courses, and professional development

Training is a major area for freelancers, especially in fast-moving industries. Generally, training can be allowable if it maintains or improves skills and knowledge used in your existing trade. Training that helps you start a new trade or move into a substantially different line of work is more likely to be disallowed, as it’s seen as creating a new income stream rather than supporting your current one.

Allowable examples (often): A designer taking an advanced course in the same design software they use for client work; a developer taking a course on a programming framework they already work with; a consultant attending a workshop that enhances an existing service offering.

Potentially disallowable examples (often): A freelance copywriter paying for a course to qualify as a yoga teacher; a web developer training to become an electrician; a marketing consultant studying a degree to change careers entirely.

There can be grey areas where training expands your service line but stays within the same trade. In those cases, document your reasoning: how the training relates to your current work, the clients you serve, and the services you already provide.

Computer equipment, tools, and consumables

Most freelancers need hardware and equipment. Whether you claim these costs as day-to-day expenses or through capital allowances depends on the item and your accounting method, but the key point remains: it must be for business use, and personal use must be apportioned where relevant.

Computers and devices: Laptops, desktops, tablets, phones, monitors, printers, routers—often allowable in proportion to business use.

Peripherals and accessories: Keyboards, mice, webcams, microphones, headphones, docking stations, cables, external drives—commonly allowable if used for work.

Stationery and consumables: Paper, ink, pens, notebooks, postage, packaging materials—these tend to be straightforward.

Specialist tools: Depending on your trade, specialist tools like cameras, lenses, lighting, audio recorders, measuring tools, craft equipment, or trade tools can be allowable. If the equipment has significant personal enjoyment use, be careful and consider apportionment.

Software and digital services: Many freelancers spend more on software than on physical stationery. Cloud services, SaaS tools, plugins, templates, digital assets, and licensed fonts are usually allowable when used for client work.

Insurance and risk management

Insurance is a common and sensible business expense. Typical allowable insurance costs include:

Professional indemnity insurance: Often essential for consultants, designers, developers, and other professionals who provide advice or deliverables.

Public liability insurance: Useful if you meet clients in person, work on site, or host events.

Employers’ liability insurance: Required if you have employees (subject to limited exceptions).

Business equipment insurance: Cover for your laptop, camera gear, tools, or other business assets.

Cyber insurance: Increasingly relevant for freelancers handling client data, especially if you provide digital services.

Insurance that is purely personal (like typical personal life insurance) is not generally a business expense, even if it makes you feel more secure while freelancing.

Banking, payment processing, and finance costs

Freelancers often use dedicated business banking and payment tools. Many of these costs are allowable when they relate to business transactions.

Business bank account fees: Monthly charges, transaction fees, and overdraft fees (where connected to business cash flow) may be allowable.

Payment processing fees: Charges from card processors, PayPal, Stripe, invoicing platforms, and marketplace platforms are typically allowable.

Interest: Interest on business loans may be allowable, but interest on personal borrowing used for personal reasons is not. If a loan is mixed-purpose, you may need to apportion.

Foreign exchange fees: If you invoice overseas clients or buy tools from abroad, FX and conversion fees can be allowable as business costs.

Use of your home, phone, and internet: practical apportionment

Apportionment is one of the most practical skills a freelancer can develop. The goal is not to find the “maximum claim” at all costs; it’s to find a fair and reasonable claim that you can explain clearly.

Home costs: A common approach is to split based on (1) the number of rooms used for business compared with total rooms and (2) the time the room is used for business. For instance, if you have a five-room home and one room is used as an office about half the time, you might claim a portion reflecting that. If the room is a dedicated office used most of the time for business, your percentage might be higher.

Phone and internet: If you have itemised bills, you can estimate business usage by reviewing a representative period. If you don’t have itemisation, you can estimate based on typical patterns. The most important thing is consistency and documentation. Keep notes about how you arrived at your percentage.

Mixed-use equipment: For laptops, cameras, and phones, if personal use is minor, you may claim most of the cost, but it’s still wise to acknowledge some personal use if it’s real and meaningful. If personal use is significant, a split is more appropriate.

Clothing, appearance, and “looking professional”

Many freelancers spend money on clothing and grooming because they feel it helps them win clients. However, everyday clothing that could be worn outside work is typically not allowable just because you wore it while working. The logic is that clothing has an inherent personal purpose—staying warm, being presentable, personal expression—so it fails the “wholly and exclusively” test.

There are exceptions where clothing is genuinely specific to the work: protective gear (like steel-toe boots, high-visibility jackets, hard hats), uniforms with branding that are not suitable for everyday wear, or costumes for performers. For most office-based freelancers, though, suits, dresses, shoes, and everyday smart clothing are usually not allowable.

Gifts to clients and promotional items

Gifts can be a thoughtful way to maintain client relationships, but the tax treatment can be restrictive. Small promotional items that clearly advertise your business (for example, branded materials) may be treated differently from general gifts like wine, hampers, or vouchers. If you give gifts, keep detailed records: who received it, the business relationship, and what was purchased. Also, be cautious of items that look like entertainment or personal generosity rather than marketing.

If in doubt, treat client gifts conservatively and discuss them with an accountant—especially if you give gifts regularly or the amounts are significant.

Business use of a personal vehicle: mileage vs actual costs

Freelancers commonly choose between claiming a mileage rate and claiming actual vehicle costs (proportionally). The best choice depends on your mileage, the type of vehicle, your running costs, and your ability to keep records.

Mileage method (often simpler): You track business miles and claim a set rate per mile. This can be easier to administer and may reduce the burden of tracking every fuel receipt and repair bill. You still need a log of business journeys.

Actual cost method (often more detailed): You total all running costs for the year and claim the business percentage based on mileage or usage. This can be beneficial if you have high running costs, but it requires more records and a clear business/private split.

Whichever method you use, consistency and documentation matter. If you switch methods, make sure you understand any restrictions and the impact on how you claim vehicle-related costs.

Capital expenses vs day-to-day expenses

Some purchases are “revenue” expenses (day-to-day operating costs) and can typically be deducted when incurred. Others are “capital” expenses—buying assets that last several years, such as a laptop, camera, or large piece of equipment. Capital expenses are often dealt with through capital allowances rather than being deducted in full as a normal expense in the same way.

In practical terms, many freelancers can still get tax relief on equipment purchases, but the mechanism may differ from a simple expense deduction. Keep clear records of asset purchases: invoice, date, what was bought, and how it is used in the business.

Limited company vs sole trader: why it matters

Allowable expenses exist under both structures, but the context changes:

Sole trader: You and your business are essentially the same legal entity. Expenses must be for the business, and private use must be apportioned.

Limited company: The company is a separate legal entity. Expenses paid by the company must be for the company’s business. If the company pays for something that is personal to you, it could be treated as a taxable benefit, additional salary, or a director’s loan issue, depending on circumstances.

If you operate a limited company, be extra careful with anything that has a personal benefit—phones, laptops, travel that includes leisure, and home-working arrangements. The compliance and reporting obligations can be more complex.

Expenses that are often disallowed or risky

Some categories regularly trip freelancers up. That doesn’t mean they are always disallowed, but they require caution and a clear business rationale.

Personal living costs: Rent, mortgage payments, groceries, ordinary meals, and personal travel are not business expenses, even if you think freelancing “requires” you to pay them. You can only claim the business portion where a cost genuinely relates to the business (such as a portion of household utilities for home working).

Fines and penalties: Parking tickets, speeding fines, and other penalties are not allowable. They are consequences of breaking rules rather than costs of earning income.

Client entertaining: Often non-deductible. Keep it separate from normal meal expenses and label it clearly so you don’t accidentally claim it as subsistence.

Dual-purpose expenses: Anything that has a strong personal element—holiday travel with some work emails, a high-end wardrobe “for meetings,” or a phone plan that is mostly personal—needs careful apportionment or may be disallowed if the business purpose is not primary.

Big-ticket “lifestyle” purchases: Expensive cars, luxury items, home renovations, and high-end gadgets can be scrutinised if they don’t clearly relate to your trade. If an expense looks excessive compared to your business needs, make sure you can justify it.

Record-keeping: what to keep and how long

Good record-keeping is what turns “I think this is allowable” into “I can prove this is allowable.” For each expense, aim to keep:

Receipts or invoices (digital or paper), proof of payment (bank statement or card record), notes on business purpose (especially for mixed-use, travel, or unusual items), and mileage logs where relevant. Many freelancers use accounting software or a spreadsheet plus a receipt-scanning app. The method matters less than consistency and completeness.

Also keep client contracts, statements of work, and correspondence that supports why you incurred certain costs (for example, travel to a specific site, or purchasing a specialist tool required for a project).

VAT considerations for freelancers

If you’re VAT-registered, expenses can involve an additional layer: you may be able to reclaim VAT on eligible business purchases, subject to VAT rules and evidence requirements. The expense being “allowable” for income tax purposes is not exactly the same as being eligible for VAT recovery, though many items overlap. You generally need VAT invoices and must consider partial exemption rules if you have mixed taxable and exempt supplies.

Even if you’re not VAT-registered, it’s still useful to store VAT invoices and keep clear records, because your registration status can change as your business grows.

Practical examples for different types of freelancers

Sometimes it’s easier to understand allowable expenses through realistic scenarios. Here are examples across common freelance professions.

Example: freelance graphic designer

A freelance graphic designer might commonly claim software subscriptions, a laptop and monitor (business use proportion), a drawing tablet, stock image licenses, font licenses, printing proofs for client work, a portion of broadband and phone, co-working desk fees, professional indemnity insurance, and marketing costs like a portfolio website and paid social ads.

They should be cautious about claiming clothing, general books unrelated to design work, and client meals labelled as “entertaining” rather than subsistence.

Example: freelance software developer

A freelance developer might claim a laptop, additional monitors, cloud hosting used for development environments, Git hosting subscriptions, developer tools, security tools, online courses that upgrade existing skills, conference tickets (if the purpose is genuinely professional), and travel costs to client meetings or short-term site work.

They should keep a clear log of any travel and be careful if attending a conference becomes a mixed business-and-leisure trip.

Example: freelance photographer or videographer

A photographer might claim camera bodies, lenses, lighting, tripods, memory cards, editing software, storage drives, cloud backup, studio rental, props used for shoots (where business-related), travel to shoot locations, insurance for equipment, and website hosting for their portfolio.

They should be cautious about claiming personal travel that happens to include some photography, or expensive gear that is used heavily for personal hobbies. Apportionment and documentation become especially important.

Example: freelance coach or consultant

A coach or consultant might claim professional memberships, CPD that improves existing coaching skills, video conferencing software, scheduling tools, CRM subscriptions, website and marketing costs, travel to client workshops, room hire for sessions, and relevant books and materials used for client delivery.

They should be careful around meals (subsistence vs ordinary meals), hospitality, and any costs that are more about personal wellbeing than the business (for example, gym memberships generally aren’t allowable just because staying fit helps you perform better).

How to decide if an expense is allowable: a quick checklist

When you’re unsure whether something is claimable, run it through a simple decision process:

1) What is the business purpose? Can you describe clearly how this expense relates to earning income in your existing trade?

2) Is there a personal benefit? If yes, can you reasonably split the cost between business and personal use?

3) Is the cost reasonable for your line of work? “Reasonable” doesn’t mean cheap, but it should make sense in context.

4) Do you have evidence? Invoice/receipt, proof of payment, and ideally a note of purpose.

5) Is it a day-to-day cost or a long-term asset? This affects how you treat it in accounts, even if you can still obtain tax relief.

Building good habits: practical tips for freelancers

Separate business and personal finances: Using a dedicated business bank account and business card makes it dramatically easier to track allowable expenses and reduces the risk of missing claims or mixing personal purchases into your records.

Capture receipts immediately: Snap a photo, upload it to your accounting software, and add a short note while you remember what it was for. The five seconds you spend now can save you hours later.

Use categories consistently: If you categorise “software,” “travel,” and “marketing” consistently throughout the year, your end-of-year tax prep becomes much faster and your reports become meaningful.

Keep a mileage log: Don’t rely on memory. A quick log in a notes app or mileage tracker is enough as long as it’s accurate.

Be conservative with grey areas: If an expense is borderline, claiming a smaller, defensible portion is often smarter than pushing for the maximum and creating risk or stress later.

When to get professional advice

Most freelancers can handle many expenses confidently once they understand the principles. However, professional advice can pay for itself if:

You’re transitioning from sole trader to limited company, you’re approaching VAT registration thresholds or considering voluntary registration, you have significant home-working costs or you’re considering claiming a dedicated home office, you purchase high-value equipment or vehicles, you have international clients and complex travel, or your income is rising and you want a structured plan for tax efficiency.

An accountant can also help ensure you’re claiming everything you’re entitled to while staying compliant, and can advise on record-keeping systems that fit your workflow.

Summary: the freelancer’s approach to allowable expenses

Allowable expenses for freelancers in the UK are fundamentally about business purpose: costs that are wholly and exclusively for your trade, or the business portion of mixed-use costs. The most common claimable expenses include home office costs (apportioned), phone and internet, travel for business purposes, software and subscriptions, professional fees, marketing, insurance, and tools and equipment.

The biggest pitfalls are usually meals and entertaining, clothing, personal living costs, fines, and any expense with a strong personal element. You don’t need to memorise every rule to do this well. If you build a habit of documenting purpose, keeping receipts, and applying reasonable apportionment, you’ll be in a strong position—both to reduce your tax bill legitimately and to feel confident that your claims are robust.

Ultimately, the best allowable expense strategy is one you can explain simply: “This cost was for my work, here’s the evidence, and where there was personal use I claimed only the business share.” That mindset keeps your finances clean, your tax returns smoother, and your freelance business more sustainable.