If you’re a sole trader in the UK, understanding what expenses you can claim is one of the simplest ways to reduce your tax bill legally.
With ongoing HMRC updates and the introduction of Making Tax Digital, it’s more important than ever in 2026 to keep accurate records and ensure you’re claiming everything you’re entitled to. Many business owners either miss out on valid expenses or claim incorrectly, which can lead to paying too much tax or facing issues with HMRC.
In this guide, we’ll explain what counts as an allowable expense and how you can make sure you’re staying compliant.
What Are Allowable Expenses?
Allowable expenses are costs that are considered “wholly and exclusively” for business purposes. In simple terms, this means the expense must be necessary for running your business. When you claim allowable expenses, they reduce your overall profit, which in turn lowers the amount of tax and National Insurance you need to pay.
Common Expenses You Can Claim
Most sole traders will have a range of everyday business costs that can be claimed. Office-related expenses are one of the most common categories. These include items such as stationery, postage, and the business use of your phone or internet. If you use your phone for both personal and business reasons, only the business portion can be claimed.
Travel expenses are also frequently claimed, provided the travel is for business purposes. This might include fuel, parking, train fares, or hotel stays if you need to travel for work. However, it’s important to note that commuting between your home and a regular place of work is not considered a business expense.
If you work from home, you may be able to claim a portion of your household costs. This can either be done using HMRC’s simplified flat rate or by calculating the exact proportion of your bills, such as electricity, heating, and internet, that relate to your business use.
Many sole traders also invest in equipment and tools to run their business. This can include items like laptops, machinery, or office furniture. In some cases, larger purchases may be treated differently for tax purposes, but they can still provide tax relief through capital allowances.
Professional services are another area where expenses can be claimed. Fees paid to accountants, legal professionals, or for business insurance are generally allowable, as they directly relate to running and protecting your business.
Marketing and advertising costs are also fully claimable. This includes spending on your website, social media advertising, and any branding or design work used to promote your business.
If you undertake training to improve your skills within your existing trade, this can usually be claimed as well. However, HMRC does not allow you to claim training that prepares you for an entirely new line of work.
For businesses that sell products, the cost of stock and raw materials is also considered an allowable expense, as these are essential to generating income.
Expenses You Cannot Claim
There are certain costs that HMRC does not allow you to claim. Personal expenses are not permitted, even if they are partly related to your business. For example, everyday clothing cannot be claimed unless it is a uniform or protective equipment required for your work.
Client entertainment is another area that often causes confusion. Taking clients out for meals or events is not considered an allowable expense, even if it helps build business relationships.
Fines and penalties are also excluded, as HMRC does not allow tax relief on these types of costs.
Part Business, Part Personal Expenses
Some expenses fall into a grey area because they are used for both personal and business purposes. This commonly applies to things like mobile phones, internet usage, and vehicles. In these cases, you are only allowed to claim the proportion that relates to your business activities. Keeping clear records will help you justify how you calculated this split if HMRC ever asks.
Why This Matters More in 2026
With the rollout of Making Tax Digital, sole traders will be required to keep digital records and submit information to HMRC more regularly. This shift means that your expense tracking needs to be accurate and up to date at all times. Mistakes or missing records could lead to penalties or unnecessary stress.
Common Mistakes to Avoid
Many sole traders either fail to claim all the expenses they are entitled to or accidentally claim things incorrectly. This often happens when receipts are not properly stored, when mixed-use expenses are claimed in full instead of proportionally, or when smaller costs such as subscriptions are overlooked. Over time, these small errors can add up and have a noticeable impact on your tax bill.
How an Accountant Can Help
Although it is possible to manage your expenses yourself, working with an accountant can make a significant difference. A professional can ensure that you are claiming everything you are entitled to while staying fully compliant with HMRC rules. They can also help you prepare for Making Tax Digital and reduce the risk of costly mistakes.
Need Help Managing Your Expenses?
If you are unsure about what you can claim or want to make sure you are not overpaying tax, KPP Chartered Accountants can help. We support sole traders across the UK by keeping their finances simple, compliant, and tax-efficient.
If you would like straightforward advice tailored to your business, feel free to get in touch with our team.
FAQs
Can I claim food as a business expense?
Food can only be claimed in specific situations, such as when you are travelling for business. Everyday meals are not considered allowable.
Can I claim my rent or mortgage?
If you work from home, you may be able to claim a portion of your housing costs, but not the full amount.
Do I need receipts for every expense?
Yes, HMRC requires you to keep records to support your claims, so it is important to keep all relevant receipts and documentation.
