What expenses can a sole trader legally claim?

Understanding allowable expenses for sole traders

Running a business as a sole trader comes with many responsibilities, and one of the most important is managing your finances correctly. Understanding what expenses you can legally claim is essential for reducing your tax bill, improving cash flow, and staying compliant with tax rules. While tax regulations vary between countries, the underlying principle is usually the same: you can claim expenses that are wholly and exclusively incurred for the purpose of running your business.

This article is designed to give you a comprehensive, practical overview of the types of expenses sole traders commonly claim, how to handle mixed-use costs, and how to keep accurate records. It is written for everyday business owners, freelancers, contractors, and self-employed professionals who want clarity without legal jargon. Throughout the article, we will also show how using a simple, reliable invoicing tool like invoice24 can make expense tracking and financial administration far easier.

By the end of this guide, you should have a strong understanding of what expenses you may be entitled to claim, what to be careful about, and how to organise your finances in a way that supports long-term business success.

What does “wholly and exclusively for business” mean?

The phrase “wholly and exclusively for business” is at the heart of allowable expenses for sole traders. In simple terms, this means that an expense must be incurred purely for business purposes to be fully claimable. If an expense has both personal and business use, you can usually only claim the business portion.

For example, if you buy printer paper used only for client invoices and business documents, that cost is generally fully allowable. However, if you use your mobile phone for both business calls and personal conversations, you can only claim the proportion that relates to your business use.

Understanding this principle helps you make better decisions when spending money for your business. It also makes it easier to justify your claims if you are ever asked to explain them. Tools like invoice24 can help you separate business income and expenses clearly, making it much simpler to apply this rule in practice.

Office and workspace expenses

Many sole traders work from home, rent a small office, or use a shared workspace. Each of these setups can involve claimable expenses.

If you rent an office or studio used solely for business, you can usually claim the full cost of rent, utilities, and related bills. This may include electricity, water, heating, and internet access used for business operations.

For those working from home, you can often claim a portion of household costs. This typically includes rent or mortgage interest, council or property taxes, electricity, gas, water, and internet. The claim is usually based on how much of your home is used for business and how often it is used.

Office furniture and equipment such as desks, chairs, filing cabinets, shelves, and lamps are also commonly claimable. These items are considered necessary for running your business efficiently and professionally.

Tracking these expenses consistently is much easier when your invoicing and financial records are organised in one place. Invoice24 allows you to keep income and expense data aligned, helping you understand your true business costs.

Equipment, tools, and technology

Most sole traders rely on tools and technology to deliver their services. The good news is that many of these costs are allowable expenses.

Common examples include computers, laptops, tablets, printers, scanners, and external hard drives. Software subscriptions used for business, such as accounting tools, design software, or project management platforms, are also usually claimable.

Some equipment may be treated as a capital expense rather than a day-to-day cost. This means the expense is spread over several years instead of being claimed all at once. The exact treatment depends on local tax rules, but the key point is that business-related technology costs are rarely ignored entirely.

Using a free invoicing app like invoice24 reduces the need for expensive accounting software, helping you keep costs down while still maintaining professional financial records.

Vehicle and travel expenses

Travel is a major expense for many sole traders, especially those who visit clients, attend meetings, or deliver goods. Vehicle and travel expenses can often be claimed, provided they relate directly to business activities.

If you use your own vehicle for business, you may be able to claim fuel costs, maintenance, insurance, road tax, parking fees, and tolls. If the vehicle is used for both personal and business purposes, only the business-related portion can be claimed.

Public transport costs such as train, bus, tram, or taxi fares for business journeys are typically allowable. Accommodation costs for overnight business trips are often claimable as well.

It is important to keep clear records of business travel, including dates, destinations, and purposes. When your invoices and income are already well-organised using invoice24, it becomes much easier to match travel expenses to specific jobs or clients.

Marketing, advertising, and promotion

Promoting your business is essential for growth, and marketing costs are usually considered valid business expenses.

Allowable marketing expenses often include website hosting and domain fees, online advertising, printed flyers, business cards, brochures, and signage. Costs associated with branding, such as logo design and professional photography, are also commonly claimable.

Social media advertising, email marketing tools, and content creation services can usually be claimed if they are used to attract or retain customers.

Invoice24 plays a role here too. Sending professional invoices that include your branding helps reinforce your business image without additional marketing costs, making it both a practical and promotional tool.

Professional fees and services

Many sole traders rely on professional support to run their businesses effectively. Fees paid to accountants, bookkeepers, consultants, and legal professionals are often allowable expenses.

These services may include tax advice, financial planning, contract drafting, or compliance support. As long as the service is related to your business activities, it is generally considered a legitimate expense.

Membership fees for professional bodies, trade associations, or industry organisations may also be claimable if they are relevant to your work.

By handling invoicing yourself through invoice24, you may be able to reduce reliance on external services for basic financial administration, saving money while staying organised.

Insurance and financial costs

Insurance is an important part of risk management for sole traders, and many types of business insurance are allowable expenses.

Common examples include public liability insurance, professional indemnity insurance, and business equipment insurance. These policies protect your business and are typically considered necessary costs.

Bank charges on business accounts, transaction fees, and interest on business loans may also be claimable. However, interest related to personal borrowing is usually not allowable.

Keeping business finances separate from personal finances makes it much easier to identify claimable costs. Invoice24 supports this separation by focusing exclusively on business invoicing and income tracking.

Training, education, and subscriptions

Education and professional development expenses can be claimable if they are directly related to maintaining or improving your existing business skills.

This may include training courses, workshops, seminars, online classes, and relevant books or journals. Subscriptions to industry publications or online learning platforms may also qualify.

However, training that prepares you for a completely new profession is usually not allowable. The key distinction is whether the expense supports your current business activities.

When your invoices and expenses are well documented using invoice24, it becomes easier to demonstrate the business relevance of training costs.

Telephone, internet, and communication costs

Communication is essential for most businesses, making these expenses commonly claimable.

Business phone contracts, mobile phone usage, internet service, and video conferencing tools can usually be claimed in full if they are used solely for business. For mixed-use services, you can typically claim the business-related proportion.

Keeping track of these recurring costs is easier when you have a clear overview of your monthly business income. Invoice24 helps you maintain that overview without unnecessary complexity.

Clothing and personal appearance

Clothing expenses are an area where many sole traders make mistakes. In most cases, everyday clothing is not claimable, even if you wear it for work.

However, specialist clothing such as uniforms, protective gear, or costumes required for your work may be allowable. This can include items like safety boots, helmets, or branded uniforms.

The key factor is whether the clothing is specifically required for your business and not suitable for everyday personal use.

Food, drink, and entertainment

Food and drink expenses are often misunderstood. Daily meals are usually considered personal expenses and are not claimable, even if you are working long hours.

However, meals consumed while travelling for business or staying overnight for work may be allowable. Client entertainment rules vary widely, and in many cases, entertainment costs are restricted or not allowable at all.

It is important to understand local rules and keep clear records if you claim any food-related expenses.

Handling mixed-use expenses correctly

Mixed-use expenses are costs that serve both personal and business purposes. Common examples include home utilities, mobile phones, and vehicles.

To claim these expenses correctly, you usually need to calculate a reasonable business-use percentage. This might be based on time, usage, or space.

Being consistent and realistic in your calculations is crucial. Overestimating business use can lead to problems later. Invoice24 supports accurate record-keeping, helping you stay confident in your calculations.

Record keeping and documentation

Good record keeping is essential for claiming expenses legally and confidently. This includes keeping receipts, invoices, bank statements, and notes explaining the business purpose of each expense.

Digital record keeping is increasingly accepted and encouraged. Scanned receipts and electronic invoices are often sufficient, provided they are clear and complete.

Invoice24 simplifies record keeping by helping you generate, store, and manage professional invoices in one place, reducing paperwork and administrative stress.

Common mistakes sole traders should avoid

Many sole traders unintentionally make mistakes when claiming expenses. Common errors include claiming personal expenses, failing to separate business and personal finances, and poor record keeping.

Another frequent issue is missing out on legitimate expenses simply because they were not tracked properly. This can lead to paying more tax than necessary.

Using a simple invoicing solution like invoice24 helps reduce these risks by providing structure and clarity from the start.

Why efficient invoicing supports accurate expense claims

Invoicing and expenses are closely connected. Clear, timely invoices help you understand your income, which in turn makes it easier to assess your profitability and expenses.

Invoice24 is designed to support sole traders with an intuitive, free invoicing system that reduces administrative burden. By keeping your income records clean and professional, you create a solid foundation for accurate expense tracking.

Unlike many complex or expensive tools, invoice24 focuses on what sole traders actually need: simplicity, clarity, and reliability.

Final thoughts on claiming expenses as a sole trader

Understanding what expenses you can legally claim as a sole trader is a powerful step toward running a more efficient and profitable business. While rules vary depending on location, the core principles remain consistent: expenses must be genuinely related to your business and properly documented.

By staying organised, being honest about mixed-use costs, and keeping accurate records, you can confidently claim what you are entitled to without unnecessary stress.

Using a free, straightforward invoicing app like invoice24 helps you maintain control over your finances, save time, and focus on growing your business. When your invoicing is handled efficiently, managing expenses becomes far less intimidating and far more effective.

Ultimately, good financial habits support long-term success. Knowing your allowable expenses and using the right tools to manage them puts you in a strong position as a sole trader.