What expenses can a sole trader legally claim in the UK?

Introduction: understanding allowable expenses for UK sole traders

If you operate as a sole trader in the UK, you’re taxed on your business profits, not on the total amount of money coming in. That distinction matters, because it means you can usually deduct certain business costs—known as allowable expenses—from your turnover to arrive at your taxable profit. The end result is that claiming legitimate expenses can reduce your tax bill and give you a clearer picture of how your business is performing.

However, “allowable” does not mean “anything that helps me run my life while I’m self-employed.” UK tax rules revolve around a core principle: a cost is generally deductible only if it is incurred wholly and exclusively for the purposes of the trade. Many expenses are straightforward—like stock you buy to resell or software subscriptions used only for client work. Others are more nuanced, especially where there’s any personal use, mixed use, or an expense that benefits you both as an individual and as a business owner.

This guide explains the most common expenses a UK sole trader can legally claim, how the rules tend to work in practice, and what to watch out for. It is designed to help you keep your records tidy and make claims you can stand behind, rather than to encourage aggressive interpretations that could cause problems later.

The key rule: “wholly and exclusively” for business

The phrase “wholly and exclusively” sits at the heart of deductible expense rules for sole traders. In simple terms, you can typically claim costs that are purely for running your trade. If an expense has a dual purpose—partly business, partly personal—you can normally claim only the business element, provided you can reasonably apportion it. If an expense is intrinsically personal (even if it also helps the business), it may not be deductible at all.

For example, a mobile phone contract used 60% for business calls and 40% for personal calls can often be apportioned, with 60% treated as an allowable expense. But everyday clothing, even if you wear it to meetings, is usually seen as personal in nature. There are exceptions for specialist protective clothing or uniforms, but “smart clothes” are not usually an allowable business expense.

Because these distinctions can feel subjective, the best approach is to keep clear records and adopt a consistent method for splitting mixed-use costs. The more your claim relies on estimates, the more important it is that those estimates are reasonable and evidenced (for example, with call logs, mileage logs, or working patterns).

Choosing a method: actual costs vs simplified expenses

Many sole traders use actual costs: you record what you spend, separate business and personal where necessary, and claim the business portion. For certain categories—especially vehicle costs and use of home—UK rules can allow simplified expenses (sometimes called flat rates) instead of tracking every utility bill or every car receipt. The simplified method can be easier administratively and can help reduce record-keeping.

But simplified expenses are not automatically better financially. In some cases, actual costs will yield a higher allowable deduction, especially if your business has high running costs or significant business mileage. In other cases, simplified expenses might be the simplest and still give a fair deduction. The choice can depend on your circumstances, and it can be worth comparing both methods (at least once) to see which is more beneficial and sustainable for you.

Office costs and administrative expenses

Office costs are some of the most commonly claimed expenses for sole traders because they are directly tied to day-to-day operations. These often include stationery, printing, postage, courier fees, and small consumables such as paper, ink, envelopes, and packaging used for orders.

You can also generally claim the cost of business phone calls, business-related data usage, and office-related software. If you work from a dedicated office or coworking space, the rent or membership costs may be allowable. If you work from home, the approach differs and is covered later in this article.

Many administrative expenses are easy to justify because they arise solely from business activity. Even so, it’s wise to keep receipts and invoices, and to avoid mixing personal purchases into business transactions where possible. If you buy stationery and household items in the same shop, for instance, keeping separate receipts—or clearly marking the business portion—can save time and reduce ambiguity later.

Premises costs: rent, utilities, and running an office

If your business operates from rented premises, you can usually claim rent and business rates as allowable expenses. Utility bills such as electricity, gas, water, and broadband used for the business premises are typically deductible as well, along with cleaning, maintenance, and minor repairs.

Be careful to distinguish between repairs and improvements. Repairs generally restore something to its previous condition (for example, fixing a broken lock or repainting a worn wall). Improvements go beyond restoration and increase the value or functionality of the asset (for example, installing an upgraded system or undertaking major renovation). Improvements may be treated as capital expenditure rather than a day-to-day expense, which changes how relief is given.

Insurance for business premises (such as commercial property insurance) can also often be claimed. If your premises include an element of personal use, or you use part of your home as a business premises, then apportionment may be needed.

Use of home as office: what you can claim

Many sole traders work from home at least some of the time, whether that means running an online shop from a spare room or using a home office for client admin. Home working often creates mixed-use expenses because your home is both a personal living space and a place of business.

There are generally two common approaches. The first is to calculate the business portion of certain household costs—such as electricity, gas, water, council tax, mortgage interest (not the capital repayment), rent, and broadband—based on a reasonable method. Common methods include apportioning by the number of rooms used for business and the amount of time they are used for business, or by an alternative measure that reflects actual usage.

The second approach, where available, is to use a simplified expenses method for working from home, based on hours worked at home each month. This can reduce the need to calculate exact portions of household bills. However, it may not reflect high household costs, and it does not typically cover everything in the same way as actual costs might.

One important practical note: if you exclusively use part of your home for business (and never for personal use), there can be implications for certain reliefs when you sell your home. Many people ensure that their “office” still has some personal use to avoid creating an exclusively business-use area. You do not have to avoid working from home, but it is worth understanding the broader implications of how you use your space and how you document that use.

Travel and subsistence: what counts as business travel

Travel costs can be allowable when they are incurred solely for business purposes. Typical examples include travelling to meet clients, visiting a temporary workplace, attending training courses (where the course is relevant to your existing trade), or travelling to buy stock or collect supplies.

Allowable travel may include public transport fares, taxi costs, parking fees (for business trips), tolls, and accommodation costs where an overnight stay is necessary for business. Subsistence—such as meals while travelling—can sometimes be allowable when it is part of qualifying business travel.

Commuting is a common area of confusion. Travel between your home and a permanent place of business is often treated as ordinary commuting and may not be allowable in the same way as travelling to a temporary location. For many sole traders, the “base” of operations can be their home or their rented office. The facts of your working pattern matter, especially if you regularly work from a fixed site.

To support claims, keep a mileage log or travel diary that notes dates, destinations, and the business purpose of each trip. This is particularly important if you are claiming vehicle mileage, which is covered in more detail below.

Vehicle costs: mileage method vs actual costs

If you use a car, van, motorcycle, or bicycle for business, you can often claim deductions for that business use. The big decision is typically whether to use a simplified mileage allowance or to claim actual running costs (apportioned for business use where required).

The mileage method involves keeping records of business miles and applying an approved rate to those miles. This method can be simpler because you do not need to track every fuel receipt and repair bill for deduction purposes, though you still need adequate mileage records. The rate is intended to cover fuel, maintenance, insurance, and depreciation in a single figure.

The actual costs method involves claiming a business proportion of costs such as fuel, insurance, servicing, repairs, breakdown cover, road tax, parking, and finance interest (where relevant). You also need to consider how you claim for the cost of buying the vehicle, which is often handled through capital allowances rather than as a straightforward day-to-day expense. If you use actual costs, you typically need to maintain a robust record of total mileage and business mileage to justify the business-use percentage.

Which method is better depends on your circumstances. High business mileage often makes mileage claims attractive for simplicity, while high vehicle costs and lower mileage might favour actual costs. What matters most is that your method is consistent, properly recorded, and reflects genuine business usage.

Professional fees, subscriptions, and memberships

Sole traders commonly pay for services that help them comply with regulations, manage their finances, and improve their professional standing. Many of these costs can be allowable, including accountancy fees for preparing accounts or tax returns, bookkeeping services, and certain legal fees that relate to the day-to-day running of the business.

Professional indemnity insurance and public liability insurance are also often allowable where relevant to the trade. Industry memberships and professional subscriptions can be deductible where they are connected to your business and not primarily personal. The key test remains whether the cost is incurred for business purposes.

Bank charges on a business bank account can generally be claimed. If you use a personal account for business transactions, you may be able to claim the business element of charges, but separating business from personal is usually easier if you maintain a dedicated business account.

Staff costs and subcontractors

Even as a sole trader, you may pay other people to help you deliver your services or run your operations. If you employ staff, wages and salaries paid wholly for business work are typically allowable, as are employer’s National Insurance contributions and pension contributions where applicable.

Many sole traders do not employ staff but work with freelancers and subcontractors. Payments to subcontractors for work done for your business can usually be claimed as allowable expenses. Be mindful of classification and compliance: whether someone is genuinely self-employed or should be treated as an employee has legal and tax implications. The cost may be allowable either way, but misclassification can create risk.

Recruitment costs, such as advertising a vacancy or paying a recruitment agency, can also be allowable if they relate to hiring for the business.

Materials, stock, and cost of goods sold

If you sell physical products, the costs of stock and raw materials are a fundamental business expense. This can include the purchase price of goods you resell, raw materials used to manufacture items, packaging materials, and direct production costs. For many businesses, these costs make up the largest portion of total expenses.

It’s important to keep purchase invoices and receipts, and to record what stock is held at the beginning and end of each accounting period. Stock accounting helps you calculate the true cost of goods sold for that period, which is relevant to arriving at your taxable profit.

Even service-based businesses may have materials costs, such as a tradesperson buying parts for a job or a photographer purchasing props for a shoot. As with other claims, the cost should be tied to the business activity and not be primarily personal.

Marketing, advertising, and customer acquisition costs

Marketing expenses are usually allowable if they are incurred to promote your business and generate sales. Common examples include website hosting, domain registration, paid ads, printed flyers, business cards, social media advertising, email marketing software, and design costs for logos or branded materials.

Costs for maintaining an online presence—such as paying for a portfolio site, e-commerce platform fees, or customer relationship management software—are often allowable as well. If you pay commissions or referral fees to others to bring in business, these can also be deductible where they are incurred for the trade.

Client entertaining is a special category with stricter treatment. While marketing aimed at the public is generally allowable, entertaining clients—such as taking a client out for dinner—may not be deductible in the same way. It’s important not to assume that any expense involving clients is automatically claimable. Marketing is usually fine; entertaining is often restricted.

IT, software, and digital services

Modern sole traders frequently rely on technology to operate. Many IT-related expenses are allowable, such as software subscriptions for productivity tools, accounting platforms, design software, and industry-specific applications. Cloud storage, cybersecurity tools, and paid plugins can also fall into this category.

Hardware costs—like laptops, monitors, printers, and phones—are also commonly incurred. How these costs are claimed can depend on whether the item is treated as a day-to-day expense or as capital expenditure. Larger equipment purchases may be treated differently for tax purposes than small consumables. If the equipment has mixed use, you may need to apportion the claim to reflect business use only.

Internet and phone costs are also claimable to the extent they are used for business. If your home broadband is used for both personal streaming and business video calls, you may need a reasonable method to estimate the business portion—or use a simplified approach if available and appropriate.

Training, education, and professional development

Training costs can be allowable when they relate to maintaining or improving skills and knowledge in your existing trade. For example, a bookkeeper taking a course on updated accounting software, or a hairdresser attending a workshop on new techniques, may be able to claim those costs if they relate to their current business activities.

Where training gives you a brand-new skill or qualifies you for a new trade, the cost may not be allowable in the same way because it is not incurred for the purposes of the existing trade. The distinction can be subtle. A course that broadens your capabilities within your current field may be allowable, while a course that retrains you for a different profession may not be.

Allowable training costs can include course fees, relevant books, and sometimes travel and accommodation if the training requires you to attend in person. As always, documentation and a clear link to your existing business are key.

Insurance: protecting your business

Insurance is often essential, and many types of business insurance premiums can be allowable expenses. Examples include public liability insurance, professional indemnity insurance, employer’s liability insurance (if you have employees), business contents insurance, and insurance for business premises.

If you insure an item that has mixed personal and business use—such as a phone or laptop—apportionment may be required. Similarly, if you insure your home and you use it partly for business, only the business portion of any additional cover specifically needed for business may be claimable.

Insurance claims and payouts can have their own tax treatment, but the premiums themselves are generally the focus for expense claims.

Financial costs: interest, bank charges, and payment processing

Business finance costs can include bank charges, overdraft interest on a business account, and interest on business loans. Payment processing fees—such as those charged by card processors, online platforms, or invoicing services—are also usually allowable, because they are directly incurred to receive income.

If you have financing arrangements for equipment or vehicles, the interest element can sometimes be an allowable cost, while the capital repayment is not treated the same way. This is another area where keeping clear statements and separating the interest from the principal can help you record expenses accurately.

Late payment fees and penalties can be more complicated. Some costs connected to normal business operations are deductible, but statutory fines and penalties are typically not treated as allowable. It’s wise to keep these items separate in your records rather than bundling them into general “bank charges.”

Clothing, uniforms, and protective gear

Clothing is a classic area of confusion. Everyday clothing—no matter how smart, how “work-like,” or how necessary it feels for professional presentation—is typically not allowable because it has an inherent personal purpose: you can wear it outside work too. This is true even if you only choose to wear it for work.

However, specialist protective clothing and equipment can often be allowable where it is required for the trade. This can include safety boots, helmets, high-visibility clothing, protective gloves, and other personal protective equipment used for work. Uniforms with a clear, distinctive function may also be allowable, particularly where the clothing identifies the business and is not suitable for everyday wear.

The practical test is whether the clothing is genuinely a requirement of the job and not simply “clothes you happen to wear while working.” When in doubt, assume ordinary clothing is not claimable and focus on clearly business-specific protective items.

Refreshments and staff welfare

Costs related to staff welfare—such as providing tea, coffee, or small kitchen supplies for employees—can be allowable. For a sole trader without employees, the position can be trickier because personal subsistence is generally not deductible. Buying your own lunch during a normal working day is usually a personal cost, not a business expense.

Where travel qualifies as business travel away from your normal base, subsistence can become more justifiable. The key is that the cost should arise because of the business travel and not simply because you need to eat.

If you work with contractors on-site and provide basic refreshments as part of the working arrangement, those costs may be allowable as part of the business operation, but it is still best to keep the amounts reasonable and well recorded.

Repairs and maintenance of business equipment

Repairs and maintenance that keep your business assets in working order are usually allowable. This can include servicing machinery, repairing tools, maintaining computers, and replacing parts. Minor repairs to premises or equipment generally fall into routine business expenses.

As mentioned earlier, improvements can be treated differently. Replacing a worn-out part with a like-for-like component is usually repair. Upgrading to a significantly better asset, extending its life beyond what’s typical, or adding new features could push the expenditure into a capital category. Keeping good notes about what you did and why helps distinguish routine maintenance from upgrades.

Capital items and capital allowances: the “big purchase” question

Not all business spending is treated as a normal expense. When you buy assets that last over time—such as equipment, machinery, vehicles, or large tools—the tax treatment often falls under capital allowances rather than day-to-day expense deductions. In practical terms, this means you may not simply deduct the full cost as an “expense” in the same way you would for stationery or subscriptions.

Capital allowances provide a way to obtain tax relief on qualifying capital expenditure. The rules can be complex and depend on the nature of the asset, how it is used, and whether there is any personal element. If you use an asset partly for personal purposes, the claim may need to be restricted to business use.

Many sole traders benefit from understanding the difference between revenue expenses (day-to-day running costs) and capital expenditure (buying long-term assets). Even if you use accounting software, it is helpful to categorize purchases correctly from the outset to avoid rework later.

Bad debts and refunds

If you invoice customers and a debt becomes genuinely irrecoverable, you may be able to claim relief for that bad debt, depending on how you account for income and the nature of your records. The idea is that you should not pay tax on income you will never receive—provided you have properly recognized the income in the first place.

Similarly, refunds to customers and returns can affect your business income and profits. These are not “expenses” in the usual sense, but they reduce your net income. Accurate bookkeeping and clear documentation make it easier to reflect these correctly.

Write-offs should be handled carefully, with evidence of attempts to collect the debt and an honest assessment that it is unlikely to be paid.

Accountancy, legal, and consultancy costs

Professional services are often central to running a compliant and efficient business. Many accountancy fees are allowable, including fees for preparing accounts, completing a self-assessment return, managing payroll if you have staff, and providing business tax advice.

Legal and consultancy costs can also be allowable where they relate to day-to-day business matters—such as drafting standard client contracts, reviewing supplier agreements, or handling routine disputes. Costs that relate to acquiring or disposing of capital assets, or to setting up the initial structure of a business, can be treated differently and may fall outside routine deductible expenses.

In practice, it helps to keep invoices detailed. If a solicitor’s bill includes both a routine contract review and a capital transaction, itemization allows you to claim the allowable portion properly.

Common expenses that are often not allowable

Understanding what you cannot usually claim is just as important as knowing what you can. Some costs are frequently claimed incorrectly because they feel “business-related” to the business owner.

Typical examples of costs that are often not allowable include:

1) Ordinary everyday clothing, even if worn for work.

2) Personal living costs, such as normal groceries, rent or mortgage costs unrelated to business use, and personal bills that cannot be reasonably apportioned.

3) Entertaining clients, such as meals and hospitality intended primarily as entertainment rather than genuine business travel subsistence.

4) Fines and penalties (for example, for breaking the law), which are usually not deductible as a cost of doing business.

5) Private medical costs and other personal benefits, unless there is a specific and legitimate business arrangement and tax treatment that applies.

Some of these areas have exceptions or nuance, but as a general rule, if an expense is personal by nature, it is unlikely to become allowable just because you are self-employed.

Record keeping: how to support your claims

Even if you know the rules, your claims are only as strong as your records. Good record keeping helps you claim everything you are entitled to and gives you confidence if your return is ever questioned.

Practical steps include:

Keep digital copies of receipts and invoices, especially for online purchases and subscriptions.

Use a separate business bank account if possible, to reduce mixing personal and business transactions.

Maintain a mileage log for vehicle claims, noting date, destination, miles, and purpose.

Document how you apportion mixed-use costs, and apply the method consistently.

Keep contracts and service agreements, especially for recurring costs or professional services.

Good records also help with cashflow management and allow you to spot wasteful spending. In other words, record keeping isn’t only about tax; it’s a core part of running a healthy business.

Practical examples of allowable expense claims

Sometimes a few scenarios make the rules easier to understand:

Example 1: A freelance designer pays for a design software subscription used solely for client projects. This is typically an allowable expense because it is wholly and exclusively for the trade.

Example 2: A plumber buys safety boots and protective gloves for site work. These items are likely allowable as protective clothing and equipment required for the trade.

Example 3: A consultant uses their personal mobile phone for both business and personal calls. They keep an estimate based on usage and claim the business proportion of the bill. The claim can be allowable if the apportionment is reasonable.

Example 4: An online seller buys stock for resale and pays platform fees and postage costs to deliver orders. These are typically core business costs and are usually allowable.

Example 5: A sole trader buys a new laptop used 80% for business and 20% for personal use. The business element may be eligible for relief, but the exact method depends on how the purchase is treated (expense versus capital allowances) and how the business-use proportion is evidenced.

Staying compliant while claiming everything you’re entitled to

The goal is not to claim “as much as possible” in a vague sense; the goal is to claim everything you can legally justify under the rules. That means focusing on expenses that are clearly connected to the trade, keeping strong records, and applying reasonable apportionments for mixed-use items.

If you are unsure about a particular expense category—especially where personal and business use overlap—adopting a conservative approach and documenting your reasoning can help. In more complex situations, professional advice can be worthwhile, especially if you are dealing with significant capital expenditure, unusual working arrangements, or fast-growing income.

When done properly, claiming allowable expenses is not a loophole or a gimmick. It is simply the normal mechanism the tax system uses to ensure you are taxed on your true profits rather than your total turnover. With sensible record keeping and an understanding of the main categories, most sole traders can stay compliant and confident while making full use of the deductions available to them.

Summary checklist of common allowable expenses for sole traders

To bring everything together, here is a high-level checklist of expense categories that are commonly allowable when they are incurred for business purposes:

Office and admin: stationery, postage, printing, small supplies, office software.

Premises: rent, business rates, utilities, repairs, cleaning, premises insurance.

Home working: apportioned household costs or simplified home-working expenses, where appropriate.

Travel: business travel costs, accommodation for business trips, some subsistence on qualifying travel.

Vehicles: mileage-based claims or actual running costs apportioned for business use.

Professional services: accountancy, bookkeeping, certain legal fees, consultancy relevant to the trade.

Insurance: public liability, professional indemnity, business equipment and premises cover.

Marketing: website costs, hosting, advertising, branding, marketing software.

IT: software subscriptions, cloud services, business-use portion of phone and internet, equipment (subject to correct treatment).

Staff and subcontractors: wages, subcontractor costs, recruitment fees, associated employer costs where relevant.

Stock and materials: goods for resale, raw materials, packaging, direct production costs.

Maintenance: repairs and servicing of business equipment and tools.

Each item still depends on the underlying principle: the cost must be for the business, and any personal element must be excluded or fairly apportioned. If you keep that principle front and centre, you’ll be well placed to claim what you can legally claim in the UK as a sole trader.