One of the most straightforward ways to reduce the tax you pay as a sole trader is to make sure you claim every business expense you are entitled to. Yet many self-employed people either claim too little — because they are not sure what counts — or too much, which can trigger HMRC scrutiny. This guide gives you a clear, category-by-category checklist of what is allowable, what is not, and how to keep records that would satisfy any inspector.

This article is general information, not financial or legal advice. Rules and figures change, so always check the latest guidance on GOV.UK or speak to a qualified accountant.

What Does "Allowable" Actually Mean?

An expense is allowable for tax purposes if it was incurred "wholly and exclusively" for the purpose of your business. That phrase comes straight from tax law, and HMRC takes it seriously. If an expense is partly personal and partly business — for example, a phone you use for both — you can only claim the business proportion. If an expense was purely personal, it is not allowable at all, even if you paid for it from your business bank account.

Category Checklist: What You Can Claim

Office and administration costs

  • Stationery, printer ink and paper.
  • Postage and packaging for business correspondence or orders.
  • Software subscriptions used in your business (accounting tools, design apps, project management).
  • Telephone and broadband costs — the business-use proportion if also used personally.
  • Business bank charges and fees.

Use of home as office

If you work from home, you can claim a proportion of your household running costs — including heating, electricity, broadband and even a portion of rent or mortgage interest (though mortgage interest has specific rules). You can calculate this either by working out the actual business proportion or by using HMRC's simplified flat rate (see below). Keep records of your working hours if you use the actual cost method.

Travel and transport

  • Business mileage in your own vehicle, claimed at HMRC's approved mileage rates (check GOV.UK for current rates).
  • Train, bus or taxi fares for business journeys.
  • Parking costs on business trips.
  • Congestion charges and road tolls incurred on business journeys.
  • Overnight accommodation and subsistence on genuine business trips — keep all receipts.

Commuting from home to a permanent place of work is not allowable — but travelling between clients, or to a temporary workplace, generally is.

Stock, materials and subcontractors

  • The cost of goods you buy specifically to resell.
  • Raw materials used to make products you sell.
  • Payments to subcontractors who help deliver your services.

Marketing and advertising

  • Website costs, domain registration and hosting fees.
  • Paid advertising (Google, social media, print).
  • Design or copywriting fees for promotional material.
  • Costs of attending trade shows or exhibitions.

Professional and financial services

  • Accountancy and bookkeeping fees.
  • Legal fees directly related to your business (not personal legal matters).
  • Professional indemnity, public liability and other business insurance premiums.

Staff costs

If you employ staff, their wages, employer National Insurance contributions and pension contributions are all allowable. Payments to subcontractors are also deductible, but be careful about the employment status rules — HMRC is strict about the distinction between employees and self-employed contractors.

Training and professional development

You can claim costs of training that updates or improves skills you already use in your business. For example, a bookkeeper paying for a new accountancy software course. What you generally cannot claim is training for an entirely new trade or profession — that would be a capital cost, not a business running cost.

Claiming expenses is not about finding loopholes — it is about paying tax on your actual profit, not your gross income. Every receipt you keep is money you are entitled to.

Simplified Expenses and Flat Rates

HMRC offers simplified expenses for certain costs, which means using a fixed rate rather than calculating the precise business proportion. This can save a lot of time. Simplified expenses are available for:

  • Vehicles: A flat rate per mile rather than claiming actual running costs.
  • Working from home: A monthly flat rate depending on how many hours per month you work from home.
  • Living at your business premises: If you run, say, a bed and breakfast and live there too, a flat rate deduction covers the personal element.

Once you start using simplified expenses for a vehicle, you cannot switch to claiming actual costs for that vehicle. Check GOV.UK for the current rates before choosing your method.

What You Cannot Claim

Some things are never allowable, regardless of whether you paid for them through your business account:

  • Your own wages or drawings — as a sole trader, you are not an employee of yourself.
  • Entertaining clients, customers or suppliers (HMRC does not allow this).
  • Personal clothing, unless it is a uniform or protective clothing required for your work.
  • Fines and penalties, including parking fines.
  • Costs with no business purpose whatsoever.

Keeping Receipts: The Golden Rule

HMRC can ask you to prove any claim you have made, for up to five years after your Self Assessment filing deadline. That means you need to keep evidence for everything you claim. Digital records are fine — scan or photograph paper receipts and store them somewhere reliable. Many sole traders use accounting apps that let you photograph receipts at the point of purchase. However you do it, make it a daily habit rather than a once-a-year panic.

It is also worth knowing that if you are already making use of VAT registration, your record-keeping requirements overlap — you will need invoices and receipts for both your VAT return and your Self Assessment. Good software handles both at once.

Allowable Expenses Summary Checklist

  • Only claim expenses that are wholly and exclusively for business.
  • For dual-use items (phone, broadband), claim the business proportion only.
  • Use HMRC's simplified flat rates if they save you time and suit your situation.
  • Keep digital or paper receipts for every expense you plan to claim.
  • Do not claim client entertaining, personal clothing or fines.
  • Keep records for at least five years after the relevant filing deadline.
  • Check GOV.UK for the latest mileage rates, flat rates and any rule changes before filing.