What expenses can a sole trader claim? A simple guide

As a sole trader you can claim any cost incurred wholly and exclusively for your business: stock, tools, travel, a share of home working costs, professional fees and more. Claim correctly and you only pay tax on your real profit. Claim incorrectly, in either direction, and you are either overpaying HMRC or inviting questions. This guide runs through the main categories in plain English.

The basic rule

HMRC allows sole traders to deduct expenses incurred wholly and exclusively for the purposes of the business. That phrase does the heavy lifting. Purely business: claim it in full. Partly business, partly personal: claim the business portion only. Mainly personal with a minor business element: generally not claimable at all.

Earning under £1,000 from self employment? The trading allowance lets you earn up to £1,000 of trading income per tax year with no tax to pay and nothing to report. Above that, you can choose to deduct the £1,000 allowance instead of your actual expenses, which is worth doing if your real costs are lower. You cannot claim both.

Day to day running costs

The straightforward ones most sole traders think of first:

• Stock or materials you buy to resell or use in your work
• Postage, packaging, stationery and printing
• Software subscriptions used for the business
• Business phone calls, and a proportion of your phone bill if the phone is also personal
• Advertising and marketing, including your website

Travel and vehicles

If you use a vehicle for work, there are two routes. The simplified mileage rate: a flat rate per business mile. Or actual costs: a business proportion of fuel, insurance, servicing and so on, based on your business share of total mileage.

Many sole traders use the mileage rate because it is simpler and needs less record keeping.

Current mileage rates (June 2026): 45p per mile for the first 10,000 business miles in a tax year, then 25p per mile after that. Motorcycles are 24p per mile. Rates can change, so confirm the current figures before relying on them.

You cannot claim ordinary commuting between home and a regular place of work. Travel from home to different client sites is usually allowable, but it is worth checking with your accountant if your situation is not straightforward.

Working from home

If you work from home you can claim a proportion of household costs: a share of heating, electricity and broadband, usually based on the rooms used for work and the time they are used for business.

HMRC also offers a simplified flat rate that avoids the calculations: £10 per month if you work 25 to 50 hours a month from home, £18 for 51 to 100 hours, and £26 for 101 hours or more, as at June 2026. The flat rate covers heat, light and power; you can still claim a business proportion of broadband and phone separately.

Equipment and tools

Laptops, cameras, power tools, specialist machinery: equipment bought for the business can usually be claimed through capital allowances. For most purchases the annual investment allowance means you deduct the full cost in the year you buy it rather than spreading it over several years.

Items you owned before starting the business and now use for work can also be brought in, usually at market value. Capital items are more detailed than everyday expenses, so if you have made significant purchases, have your accountant check the treatment.

Professional fees, subscriptions and insurance

Accountancy fees for your business accounts and tax return are allowable, as are legal fees for business contracts. Professional subscriptions count if the body appears on HMRC's approved list.

Business insurance is claimable: public liability, professional indemnity, and trade or equipment cover. Personal life insurance and income protection generally are not.

Staff and subcontractors

Payments to subcontractors or casual workers are allowable, as are wages and employer National Insurance if you employ people directly.

You cannot pay yourself a deductible wage. As a sole trader you are the business. Your drawings come out of profit; they are not a staff cost. If you want a structure where you can take a salary, that is a sole trader vs limited company conversation.

Bank charges and interest

Charges on a dedicated business account are allowable, and so is the interest element of a business loan or overdraft (not the capital repayments). Running the business through a personal account is common but makes record keeping harder and muddies what is business and what is personal. A separate business account pays for itself in saved admin.

What you cannot claim

The ones HMRC regularly refuses:

• Personal clothing, even if you only wear it for work, unless it is a uniform or protective clothing specific to the job
• Client entertaining, which is never deductible
• Fines and penalties, including parking fines on business journeys
• Everyday food and drink, unless you are travelling away from your usual base, typically overnight

What records do you need to keep?

Every claim needs evidence: receipts, invoices or bank statements showing what you spent, when, and what for. HMRC can ask for records going back up to five years from the filing deadline, so keeping things organised matters. Our guide to what records HMRC expects you to keep covers the detail.

Making Tax Digital now applies. From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC, with the threshold dropping to £30,000 from April 2027. Paper records and a January scramble no longer cut it at that level. If this affects you, getting set up properly is now urgent rather than optional.

If your records are not perfect, all is not lost. A good accountant can often reconstruct reasonable figures from bank statements, but keeping records as you go is always easier and safer than catching up later.

Frequently asked questions

Can I claim expenses without receipts?

You should have evidence for everything you claim, but a missing receipt is not automatically fatal. Bank statements showing the payment often support a claim. The pattern to avoid is round-sum estimates with no paperwork behind them, which HMRC treats with suspicion.

Can I claim my lunch as a sole trader?

Generally no. Everyday meals are a personal cost even on working days. The exception is subsistence while travelling for business outside your normal pattern, typically with an overnight stay, where reasonable food and accommodation costs are allowable.

Can I claim a proportion of my rent or mortgage?

If you work from home you can claim a business proportion of household running costs, and renters can include a share of rent in the calculation. Mortgage interest (not capital) can feature in a proportional claim, but be careful using a room exclusively for business, as it can have capital gains tax implications when you sell. Worth a conversation first.

Do expenses work differently if I go limited?

Yes, in places. A limited company can pay you a salary, claim different rules on some costs, and pays corporation tax rather than income tax on profits. What is claimable and how it is taxed shifts, which is one of several factors in the sole trader vs limited company decision.

Ready to make sure you are claiming everything you should?

At HLS Accounts in Cardiff, we prepare sole trader accounts and Self Assessment tax returns for tradespeople, salon owners, clinic practitioners, retailers and local service businesses across South Wales. We review your income and expenses, check you are claiming what you are entitled to, and explain the figures in plain English before anything is filed.

Book a free consultation or call us on 02922 805941.