Allowable Business Expenses for UK Sole Traders — The Complete 2026 List

Why expenses matter more than you think

Every pound of allowable expense you record reduces your taxable profit by a pound. At the basic rate of 20% income tax plus 9% Class 4 National Insurance, correctly recording a £500 office cost saves you £145 in tax. Most sole traders leave hundreds — sometimes thousands — of pounds unclaimed every year.

HMRC allows you to deduct expenses that are incurred "wholly and exclusively for the purposes of the trade." That phrase does the heavy lifting. If you cannot argue that an expense was for business only, HMRC will disallow it.

Office and administrative costs

You can claim stationery, printer ink, postage, and small office equipment. Subscriptions to professional tools — accounting software, cloud storage, project management tools — are all allowable if used for the business.

Phone and internet: If your phone and broadband are used for both personal and business purposes, you can claim a reasonable proportion — typically 50-80% for most sole traders. Keep a usage log if HMRC ever asks.

Travel and transport

Business mileage is allowable at the HMRC approved mileage rate: 45p per mile for the first 10,000 miles, 25p per mile thereafter. You must keep a mileage log recording the date, destination, purpose, and miles for every business journey. Commuting from home to a regular workplace is not allowable.

Public transport (trains, taxis, buses) for business journeys is fully deductible. Overnight stays for business travel, including meals, are allowable at reasonable rates.

Parking: Business parking is deductible. Parking fines are not — HMRC does not allow penalties.

Marketing and advertising

Website costs, domain registration, hosting, social media advertising, business cards, flyers, and search advertising are all fully allowable. The design cost of your logo, website, and marketing materials is also deductible as a business expense.

Professional fees and subscriptions

Accountant and bookkeeper fees are allowable. Legal fees for business contracts are allowable. Professional body memberships — ACCA, ICAEW, AAT, Chartered Institute fees — are deductible if they relate to your business activities.

Equipment and tools

Equipment you buy entirely for business use is allowable. This includes computers, laptops, tablets, cameras, and tools specific to your trade. Where equipment is used partly for personal purposes, only the business proportion is deductible.

Under the Annual Investment Allowance, you can deduct the full cost of most equipment against your profits in the year of purchase rather than depreciating it over several years.

Working from home

If you work from home, you can claim a flat rate from HMRC without keeping detailed records:

• 25-50 hours per month: £10/month
• 51-100 hours per month: £18/month
• 101+ hours per month: £26/month

Alternatively, you can calculate the actual proportion of home costs (mortgage interest or rent, utilities, council tax) attributable to business use. This is more complex but often produces a higher deduction.

Bank charges and interest

Business bank account fees are fully deductible. Interest on a business loan or overdraft is allowable. Personal loan interest is not — this is another reason to keep business and personal finances separate.

Training and professional development

Training costs that update your existing skills are allowable. A sole trader accountant attending a CPD course — deductible. A bookkeeper learning new accounting software — deductible. Training that qualifies you for an entirely new profession is generally not allowable, but this line is blurry and worth discussing with your bookkeeper.

What you cannot claim

• Entertaining clients (HMRC has very limited allowances here — entertaining is generally not deductible)
• Clothing that could be worn outside work (a suit is not allowable; a branded uniform or safety equipment is)
• Fines and penalties
• Personal expenses passed through the business
• Food and drink for yourself on normal working days (subsistence is only allowable on overnight business trips)

The right software makes this easy

Xero and QuickBooks both allow you to categorise expenses against the correct HMRC codes as you go. When your bookkeeper reviews your records monthly, any disallowable expenses are flagged before they cause problems. The alternative — sorting a year's worth of receipts in January — results in missed claims and a larger-than-necessary tax bill.