Allowable expenses for sole traders: what can you claim in the UK?

Running a business as a sole trader often means paying for tools, materials, software, travel, phone bills, insurance and other everyday costs. The good news is that some of these costs may reduce your taxable profit.

But not every cost can be claimed.

In the UK, sole traders can usually claim allowable business expenses when calculating their taxable profit. These are costs that are properly connected to running the business. HMRC’s core principle is that expenses must be incurred “wholly and exclusively” for the purposes of the trade, profession or vocation. If a cost has both business and private use, only the business part may be allowable where it can be clearly separated.

This guide explains the most common sole trader expenses, what you may be able to claim, and what records you should keep.

What are allowable expenses?

Allowable expenses are business costs that you can deduct from your self-employed income when working out your taxable profit.

For example, if your business income is £40,000 and you have £6,000 of allowable business expenses, your taxable profit would generally be calculated from £34,000 before other relevant tax rules are applied.

This does not mean every payment from your bank account is automatically deductible. The expense must be related to your business, and you should keep records to support the claim.

The main HMRC rule: business use only

The simplest way to think about allowable expenses is this:

Was the cost genuinely for your business?

If yes, it may be allowable. If the cost was personal, it usually is not. If the cost was partly business and partly personal, you may only be able to claim the business part.

For example, if you use your phone for both business and personal calls, you should only claim the business proportion of the bill. If you buy everyday clothes that you also wear outside work, they are usually not allowable just because you wear them while working.

This is why accurate records matter. The more clearly you can show what the cost was, why it was paid, and how it relates to your business, the easier it is to keep your accounts clean.

Common sole trader expenses

HMRC lists several common categories of allowable expenses for self-employed people, including office costs, travel costs, clothing expenses, staff costs, stock or raw materials, financial costs and business premises costs.

Below are some of the most relevant categories for sole traders.

1. Office costs

Office costs are one of the most common types of sole trader expenses.

You may be able to claim costs such as:

stationery
printing
postage
business phone bills
business software
computer software used for work
small office supplies

For example, if you pay for accounting software, invoicing software, design software or another digital tool that you use for your business, that cost may be an allowable expense.

If something is used partly for personal reasons, such as a phone or internet connection, you should only claim the business-use proportion.

Keeping track of business expenses should not be harder than running the business itself.
Kletta helps UK sole traders record income, scan receipts and keep everyday bookkeeping organised in one simple app.

👉 Learn more about Kletta for sole traders

2. Travel costs

Sole traders may be able to claim travel costs when the journey is for business.

This may include:

fuel for business journeys
parking for business trips
train fares
bus fares
taxi fares for business journeys
vehicle costs where relevant

However, HMRC makes clear that some travel costs are not allowable. You cannot claim non-business travel, fines or penalty charges, or normal travel between home and work.

This is an important distinction. A builder travelling from one client site to another may have a business journey. A sole trader driving for a personal errand would not.

If you use a car, van or motorcycle for business, you may also be able to use simplified expenses and calculate vehicle costs using a flat rate for business mileage instead of working out actual running costs. HMRC says simplified expenses can be used for cars, goods vehicles such as vans, and motorcycles, subject to the relevant rules.

3. Clothing expenses

Clothing is one of the areas where sole traders often get confused.

You may be able to claim for:

uniforms
protective clothing needed for work
costumes for actors or entertainers

But you usually cannot claim for normal everyday clothing, even if you wear it while working.

For example, steel toe cap boots or protective workwear may be allowable for a tradesperson. A normal pair of jeans, trainers or a jacket would usually not be allowable just because you wear them to meet clients.

The key question is whether the clothing is specifically required for the business, or whether it is ordinary clothing with a private use as well.

4. Stock, materials and goods for resale

If your business sells goods, makes products or uses materials to deliver work, you may be able to claim the cost of stock and raw materials.

This may include:

goods bought for resale
raw materials
parts used in customer work
direct production costs
packaging used for products

For example, a sole trader who makes handmade products may be able to claim the cost of materials used to make those products. A tradesperson may be able to claim materials bought for a customer job.

5. Staff and subcontractor costs

Some sole traders work alone, but others pay subcontractors, freelancers or employees.

HMRC says self-employed people may be able to claim allowable business expenses for costs such as employee salaries, bonuses, pensions, benefits, agency fees, subcontractors, employer’s National Insurance and training courses related to the business. You cannot claim personal domestic help such as nannies or carers.

This can be especially relevant for trades, construction work, creative services and small local businesses that sometimes need extra help.

6. Legal, financial and professional costs

Professional costs may also be allowable when they are for business reasons.

This can include:

accountancy fees
legal advice for business matters
professional indemnity insurance
business bank charges
business insurance

HMRC states that accountancy, legal and other professional fees can count as allowable business expenses when they are for business reasons.

For example, paying an accountant to help with your Self Assessment tax return may be allowable. Paying a solicitor for a personal matter would not usually be a business expense.

7. Business premises costs

If you rent or operate from a business premises, you may be able to claim costs such as:

rent for business premises
business rates
utility bills
property insurance
security
heating and lighting

HMRC also notes that if you use your home as an office, you may be able to claim only the part that is used for business.

This is another area where the business/private split matters. If you work from home, you should avoid simply claiming household bills without a clear basis.

8. Working from home expenses

Many sole traders work from home at least some of the time.

There are usually two broad ways to approach this:

calculate the actual business proportion of your home costs, or
use simplified expenses where HMRC allows it.

Simplified expenses allow some self-employed people to use flat rates instead of calculating exact business costs. HMRC says simplified expenses can apply to vehicles, working from home, and living at your business premises. They are optional, so you can choose whether they suit your business.

For working from home, HMRC says you can only use simplified expenses if you work for 25 hours or more a month from home.

This means you should be careful with home office claims. The cost must be connected to business use, and the calculation should be reasonable.

Preparing for Making Tax Digital starts with better records.
If you want to keep your receipts, expenses and business finances in one place, Kletta helps you build cleaner digital records throughout the year.

Expenses sole traders usually cannot claim

It is just as important to understand what you usually cannot claim.

Common non-allowable costs include:

personal expenses
everyday clothing
non-business travel
normal travel between home and work
fines and penalties
personal food and drink in normal circumstances
costs where the business and private part cannot be separated
domestic help such as childcare or nannies

HMRC specifically lists non-business travel, fines or penalty charges, and travel between home and work as costs you cannot claim under travel expenses.

A useful rule of thumb is this: if the cost would still exist even if you did not run the business, it may not be fully allowable.

Do you need receipts for sole trader expenses?

Yes, you should keep evidence of your business expenses.

HMRC says self-employed people need to keep records of all sales and income, all business expenses, VAT records if registered for VAT, PAYE records if they employ people, and records about personal income.

You do not usually need to send proof of expenses when submitting your Self Assessment tax return, but you should keep records so you can show them to HMRC if asked.

Good records may include:

receipts
invoices
bank statements
mileage logs
supplier bills
software subscription invoices
notes explaining business use
records of how you calculated business/private splits

HMRC says self-employed people must keep their records for at least 5 years after the 31 January submission deadline of the relevant tax year.

Why good expense tracking matters

Good expense tracking helps you understand your business properly.

It can help you:

avoid missing legitimate business costs
reduce mistakes in your tax return
keep better evidence for HMRC
understand your real profit
prepare for Making Tax Digital
avoid last-minute stress at the end of the tax year

Small costs can add up. A few receipts for materials, parking, software, tools or postage may not feel important at the time, but over a full tax year they can make a real difference to your records.

The problem is that many sole traders leave this too late. By the time the tax return deadline arrives, receipts are missing, transactions are hard to remember, and business costs are mixed with personal spending.

How Kletta helps sole traders manage expenses

Kletta is built for sole traders who want accounting to feel simpler.

With Kletta, you can keep your business finances organised in one place, track income and expenses, scan receipts, and build cleaner records as you go. Instead of trying to remember every business cost months later, you can record expenses closer to when they happen.

This is especially useful if you are preparing for Making Tax Digital, where digital records and regular bookkeeping will become more important for many sole traders.

Kletta does not replace professional tax advice where your situation is complex, but it helps make everyday sole trader bookkeeping easier, clearer and less stressful.

Final thoughts

Allowable expenses can reduce your taxable profit, but they need to be handled carefully.

The safest approach is to ask three simple questions:

Was this cost for my business?
Can I prove it?
Have I kept a clear record of it?

If the answer is yes, the expense may be allowable. If the cost is personal, mixed-use or unclear, you should be more careful and check HMRC guidance or speak to a professional.

For most sole traders, the best habit is simple: keep your records up to date throughout the year, not just when the tax return deadline arrives.

Sole traders >>