Every Expense a UK Sole Trader Can Claim in 2026/27
Published 5 April 2026 · 10 min read
The golden rule: An expense is allowable if it's incurred "wholly and exclusively" for your business. If something is partly personal, you can claim the business portion. This guide covers every major category with real numbers.
If you're self-employed in the UK, every legitimate business expense you claim reduces your taxable profit — and your tax bill. Yet most sole traders miss deductions they're entitled to, simply because they don't know what qualifies.
This guide lists every common allowable expense for the 2026/27 tax year, with worked examples showing exactly how much each one saves you.
How expenses reduce your tax bill
Your tax is calculated on profit, not revenue. Profit = income minus allowable expenses. Every pound you claim as an expense reduces your taxable profit by one pound.
Worked example: You earn £40,000 and claim £6,000 in expenses. Your taxable profit is £34,000. At the 20% basic rate (after the £12,570 personal allowance), your tax bill drops by £1,200. If you're a higher-rate taxpayer, the saving doubles to £2,400.
Office, equipment & supplies
- Stationery & postage: Paper, printer ink, envelopes, stamps, packaging materials
- Phone & broadband: Business percentage of your monthly bill (e.g. 60% business use = claim 60%)
- Software & subscriptions: Accounting software, cloud storage, Microsoft 365, domain names
- Computer & equipment: Laptops, phones, tablets, printers under £1,000 (items over £1,000 may need capital allowances)
- Tools & small equipment: Hand tools, safety equipment, measuring instruments
Working from home
If you work from home, you can claim a proportion of your household bills. HMRC offers two methods:
Simplified expenses (flat rate):
- 25–50 hours/month at home: £10/month
- 51–100 hours/month: £18/month
- 101+ hours/month: £26/month
Actual costs (proportion method): Calculate the business percentage of rent/mortgage interest, council tax, electricity, gas, water, broadband, and insurance. For example, if you use one room out of five exclusively for business, claim 20%.
Worked example: Your annual household bills total £12,000. You use one room (20%) exclusively for business, 5 days a week. Claim: £12,000 × 20% = £2,400. At 20% tax, that's £480 saved.
Travel & vehicles
- Business mileage: 45p/mile for the first 10,000 miles, then 25p (cars/vans). 24p for motorcycles, 20p for bicycles
- Parking & tolls: Business parking, congestion charges, bridge tolls
- Public transport: Train, bus, tube, taxi fares for business journeys
- Hotels & meals: Overnight business travel only (not your daily lunch)
Not claimable: Your daily commute from home to a permanent workplace. Home to your regular office is commuting, not a business journey.
Worked example: You drive 12,000 business miles in a year. Claim: 10,000 × 45p + 2,000 × 25p = £5,000. At 20% tax, that's £1,000 saved. At 40%, it's £2,000. See our full HMRC mileage rates guide.
Stock, materials & direct costs
- Raw materials: Building materials, fabric, ingredients, components
- Goods for resale: Stock, wholesale purchases
- Packaging: Boxes, tape, labels, shipping materials
- Subcontractor payments: Including CIS deductions if you're in construction
Staff costs
- Employee wages & salaries: Gross pay including bonuses
- Employer's NI contributions: Currently 15% above the threshold
- Pension contributions: Employer contributions to workplace pensions
- Freelancer/agency costs: Payments to self-employed contractors
- Training: Courses that update existing skills (not courses for a different career)
Premises
- Rent: Business premises or co-working space
- Business rates: Not council tax (that's the home office method)
- Utilities: Electricity, gas, water for your business premises
- Repairs & maintenance: Fixing, repainting, replacing fittings (not improvements)
- Cleaning: Office/workspace cleaning services
- Insurance: Building and contents insurance for business premises
Professional services & fees
- Accountant fees: Tax return preparation, bookkeeping, payroll services
- Legal fees: Contracts, debt recovery, business disputes (not personal legal issues)
- Professional indemnity insurance: PI, public liability, employer's liability
- Trade body memberships: RICS, CIOT, ACCA, federation of small businesses
- Bank charges: Business account monthly fees, transaction charges
- Business insurance: Professional indemnity, public liability, cyber insurance
Marketing & advertising
- Website costs: Hosting, domain renewal, design, SEO
- Advertising: Google Ads, Facebook Ads, print ads, flyers
- Business cards & signage: Printed materials, vehicle wraps, shop signs
- Trade shows & exhibitions: Stand hire, promotional materials, travel to events
Clothing
- Claimable: Branded uniforms, safety boots, PPE, high-vis vests, hard hats, overalls
- Not claimable: Everyday clothes, even if you only wear them for work. A plain black suit is not a uniform.
Financial costs
- Business loan interest: Interest payments on loans used for business purposes
- Credit card interest: On business purchases only
- Hire purchase: Interest element of HP agreements for business assets
- Bad debts: Invoices you've raised but will never be paid
VAT (if registered)
If you're VAT registered under the standard scheme, you reclaim input VAT on business purchases. If you're on the Flat Rate Scheme, you don't reclaim VAT on most purchases but pay a lower percentage of your gross turnover.
Limited cost trader rule: If your goods purchases are under 2% of turnover (or under £1,000/year), the flat rate becomes 16.5% regardless of your trade sector. Most service businesses fall here.
The £1,000 trading allowance
If your total self-employment income is under £1,000 per year, you don't need to register as a sole trader or file a tax return. If it's over £1,000, you can choose to either:
- Deduct the £1,000 trading allowance instead of actual expenses (useful if your expenses are low), or
- Deduct your actual expenses (better if they exceed £1,000)
You can't use both.
What you can NOT claim
These are the most common mistakes HMRC looks for:
- Personal expenses: Groceries, personal travel, childcare, gym membership
- Entertainment: Taking clients to dinner, hospitality, gifts over £50
- Your daily commute: Home to permanent workplace
- Fines & penalties: Parking tickets, speeding fines, HMRC penalties
- Personal clothing: Even if you only wear it for work
- Capital items at full cost: Items over £1,000 use capital allowances (Annual Investment Allowance), not revenue expenses
- Drawings: Money you take out of the business for personal use
Common mistakes that trigger HMRC enquiries
- Claiming 100% of mixed-use items: If your phone is 60% business, claim 60%. Not 100%.
- No receipts: Bank statements alone may not be enough. HMRC wants to see the receipt showing what was bought, from where, and the VAT breakdown.
- Expenses wildly out of proportion: If you earn £30,000 and claim £25,000 in expenses, expect questions.
- Round numbers: Claiming exactly £500 for "office supplies" every quarter looks made up. Real expenses have odd numbers.
- Claiming entertainment: HMRC disallows client entertainment. This is their #1 adjustment reason in enquiries.
How to track your expenses (the easy way)
From April 2026, sole traders earning over £50,000 must keep digital records under Making Tax Digital. But even if you're below the threshold, going digital now means:
- No shoeboxes of crumpled receipts at year end
- Expenses categorised to the correct SA103F box automatically
- Mileage logged with date, destination, and purpose
- Records exportable in seconds for your accountant
PocketReceipt does exactly this. Snap a photo of any receipt and AI extracts the store, amount, date, VAT, and category. Smart warnings flag duplicates and capital items before you save. Free on iOS and Android.
Once your receipts are scanned, CodeIQ by Bank Reconciler automates the bookkeeping — upload a bank statement and its AI matches transactions, classifies VAT, and reconciles everything against Xero, QuickBooks, Sage, or Pandle in minutes.
Summary: quick-reference expense checklist
| Category | Examples | SA103F Box |
|---|---|---|
| Cost of goods | Stock, materials, direct costs | Box 17 |
| Car/van expenses | Mileage, fuel, insurance, repairs | Box 18 |
| Travel & subsistence | Train, hotel, meals on overnight trips | Box 19 |
| Staff costs | Wages, employer NI, pensions | Box 20 |
| Premises | Rent, rates, utilities, insurance | Box 21 |
| Repairs | Property repairs, equipment maintenance | Box 22 |
| General admin | Phone, postage, stationery, software | Box 23 |
| Advertising | Website, ads, business cards | Box 24 |
| Interest | Business loan/credit card interest | Box 25 |
| Other | Professional fees, insurance, bad debts | Box 26 |
Sources: ITTOIA 2005 · BIM35000–47000 · EIM31240–31350 · HMRC HS222 · Finance Act 2024
Related guides: HMRC mileage rates 2026/27 · Best receipt scanner apps · Self Assessment deadlines
Start tracking your expenses
Snap receipts, log mileage, export organised records. Free on iOS and Android.