Claim every expense you are entitled to and you pay tax only on real profit. Miss them and you overpay, sometimes by hundreds of pounds. Here is the full list of what a UK sole trader can and cannot claim, in plain English.
The short version
You can deduct costs that are wholly and exclusively for your business, from office supplies and travel to a slice of your home bills. You cannot claim personal spending, everyday clothing, commuting, or client entertaining.
The golden rule: wholly and exclusively
To be allowable, a cost must be incurred wholly and exclusively for your business. If something has a mix of business and personal use, such as a phone, you claim only the business proportion. Keep a record and a receipt for everything you claim (see our guide to cash income and receipts).
What you can claim
Office and admin
Everyday running costs of doing the paperwork: stationery, printer ink, postage, phone and broadband (business share), and business software and subscriptions.
Business premises
The cost of a place to work from: rent, utilities, business rates, property insurance, and security for your business premises. You cannot claim the cost of buying premises.
Travel
Getting around for work: fuel, train, bus, air and taxi fares, hotel stays, parking and vehicle running costs for business journeys. Normal commuting to a regular workplace does not count. For vehicles you can use the flat mileage rate of 45p a mile for the first 10,000 business miles in the year, then 25p a mile after that, instead of working out actual running costs.
Clothing
Only specialist workwear qualifies: uniforms, protective clothing and costumes for performers. Everyday clothing you could wear outside work is not allowable, even if you only wear it for work.
Staff and subcontractors
The cost of the people who help you: salaries, wages, bonuses, pensions, employer National Insurance, agency fees and subcontractor costs.
Stock and materials
What goes into what you sell: raw materials, direct costs of producing goods, and stock you buy to resell.
Financial and professional costs
The cost of banking and expert help: business bank and card charges, interest on business loans, business insurance, and accountant, solicitor or other professional fees.
Marketing
Getting your name out there: your website, advertising, online listings, mailshots and free samples.
Training
Course costs that update or keep up skills you already use in your business. Training to start a brand new trade is not allowable.
Working from home
You can claim a reasonable proportion of your household costs, or use HMRC's simplified flat rate, which is £10 a month for 25 to 50 hours of business use, £18 a month for 51 to 100 hours, and £26 a month for 101 hours or more.
Capital allowances for bigger buys
Larger items you keep and use in the business, such as equipment, tools, machinery and vans, are capital assets rather than everyday expenses. Most can be claimed through the Annual Investment Allowance, which lets you deduct the full cost of qualifying items, up to £1 million a year, in the year you buy them. Cars are treated separately through capital allowances based on their emissions.
The £1,000 trading allowance
If your total self-employed income for the year is £1,000 or less, you usually do not need to report it or pay tax on it. If it is more, you can choose to deduct a flat £1,000 trading allowance instead of your actual expenses, which is worth doing only when your real expenses are lower than £1,000.
What you cannot claim
| Not allowable | Why |
|---|---|
| Client entertaining | Meals and hospitality for clients are specifically disallowed |
| Everyday clothing | Only uniforms, protective wear and costumes count |
| Commuting | Travel to a regular workplace is personal |
| Your own wages or drawings | Money you take from the business is not a cost |
| Fines and penalties | Parking and other fines are not allowable |
Let the AI find them for you
Oazy reads every transaction from your bank and sorts allowable from disallowable against these rules automatically, then explains each call. It flags the borderline ones for a quick yes or no, so you claim everything you should without combing through a year of statements. See it in your account.
