The quick answer: Sole trader expenses are business costs you deduct from your income to reduce your taxable profit. To be allowable, a cost must be incurred wholly and exclusively for your business. You record them on your Self-Assessment tax return, and they reduce your tax bill rather than being paid back to you.
If you’re self-employed, October is when the January deadline starts to feel close. Your 2025/26 return is due by 31st January 2027, and the sole trader expenses you’ve recorded over the year are one of the biggest levers on what you’ll owe. Claim too little and you overpay, claim the wrong things and you risk issues from HMRC.
This guide covers what you can claim, what you can’t, how mileage and working from homework, and what records to keep. If you’d rather hand it over, our team can prepare your Self Assessment tax return for you.
What are sole trader expenses?
Sole trader expenses are the everyday costs of running your business. This includes things like:
- Stock
- Insurance
- Software
- Travel
- Professional fees.
You subtract them from your income, and you pay tax only on what remains, which is your taxable profit.
HMRC’s tests that the cost must be incurred wholly and exclusively for business. If a cost is partly personal, you can usually claim only the business share.
You’ll often hear people talk about “writing off” expenses, which is an unofficial term for deducting a cost from your profit. If you’ve been thinking about writing off expenses, this guide will be able to help you.
How sole trader expenses reduce your tax bill
When dealing with expenses, especially for those who are self-employed, it’s sometimes confusing. The thing to know is that claiming an expense doesn’t give you the money back into your bank account, instead, it lowers the profit you’re taxed on.
Here’s an example. Say your business made £30,000 profit before expenses, and you have £2,000 of allowable expenses:
- Taxable profit would decrease from £30,000 to £28,000
- That means if you’re a basic-rate taxpayer in England, Wales or Northern Ireland, that saves roughly 26p for every £1 claimed (20% income tax plus 6% Class 4 National Insurance)
- On £2,000 of expenses, that’s about £520 off your bill.
Scottish income tax bands differ, and your own saving depends on your profit level, which is one reason it pays to get the numbers right.
What counts as an allowable expense?
Here’s a quick guide to the main categories that are considered for allowable expenses. When reviewing these costs, be sure to check them thoroughly and when possible, validate expenses with an accountant to ensure you’re including the right amounts.
What you can claim as allowable expenses
| Category | Examples |
| Office costs | Stationery, software subscriptions, the business share of phone and broadband |
| Premises | Rent, business rates and utilities for separate business premises |
| Stock and materials | Items you buy to sell on or to make your products |
| Staff and subcontractors | Wages, subcontractor payments, agency fees |
| Travel | Fuel, parking, train, bus and air fares, hotels (but not your normal commute) |
| Insurance | Business, public liability and professional indemnity cover |
| Professional fees | Accountancy and legal fees |
| Marketing | Advertising, website costs |
| Financial costs | Business bank charges, interest on business loans |
| Training | Courses that keep your existing skills up to date |
| Work clothing | Uniforms and protective clothing |
What you can’t claim as an allowable expense
- Everyday clothing you also wear outside work
- Client entertainment
- Fines and penalties
- Personal spending and your own drawings
- Your normal commute
- Depreciation (capital allowances cover this instead, see below).
Can I claim 45p per mile as a sole trader?
Yes, but the rate depends on the tax year. It’s 45p for the 2025/26 return you’re filing now, and 55p from April 2026.
HMRC raised the simplified mileage rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, applying to the self-employed in 2026/27, with 25p per mile after that.
That’s good news, as it will mean more claimable mileage for sole traders going forward, but there is a catch.
For this self-assessment season, the return you file by 31st January 2027 covers 6th April 2025 to 5th April 2026, so for that return you should still use 45p for the first 10,000 miles and 25p after.
The 55p rate applies to the 2026/27 tax year, which you’ll report next year. If your accounting year doesn’t follow the tax year, check how the rate applies.
Mileage rules to keep in mind
- Mileage or actual costs, not both: If you use the mileage rate, you can’t also claim fuel, insurance, repairs or capital allowances for that vehicle. You can still claim parking, vehicle cleaning, signage on your vehicle, tolls and congestion charges separately
- You must stick with your method: Once you choose the mileage rate for a vehicle, you stay on it for that vehicle
- Cars and vans only: Motorcycles and bicycles have separate mileage rates
- Commuting isn’t allowable: Journeys between home and a regular workplace don’t count, though travel to clients and temporary workplaces generally does.
Does HMRC ask for proof of mileage?
HMRC can ask to see your records if they review your return, so keep a mileage log with the date, destination, purpose and miles of each journey. You don’t need fuel receipts for the mileage method, but you do need that log. For more on the rate change, read our guide to the new HMRC mileage rate.
Working from home expenses
If you work from home, you have two ways to claim as a sole trader.
- The flat rate (simplified expenses): You claim a set amount each month depending on your hours working at home. This is £10 for 25 to 50 hours, £18 for 51 to 100 hours, and £26 for 101 hours or more. For this, you need to work at least 25 hours a month at home. The flat rate doesn’t include phone and internet, which you claim separately based on business use.
- Actual costs: You work out the business share of household costs such as heating, electricity and insurance, based on the rooms and hours you use for work. It’s more work and needs good records, but it can give a bigger claim if you have a dedicated office and high bills.
The flat rate suits most people because it’s easier to calculate and less time consuming than determining actual costs. If you’re not sure which gives you more, our guide to claiming home office expenses walks through both.
Expenses for lunch, clothing and other grey areas
Some expenses sit in a grey area. Here are the questions we hear most often that we haven’t covered above.
Can I claim lunch if I’m self-employed?
Not typically, as your normal day-to-day lunch is a personal cost. However, meals while travelling for business, such as an overnight trip, can be allowable
Can I claim clothing as an expense?
Only uniforms and protective clothing. Smart clothes you could wear anywhere don’t qualify, even if you only wear them for work.
Can I claim entertainment costs?
Taking clients out isn’t allowable as an expense, even when it’s good for business.
What about expenses for a limited company?
The rules are different for directors of limited companies. If you’re weighing the two, see our guide to sole trader vs limited company.
Commonly overlooked sole trader expenses
These are easy to miss, and often worth chasing:
- Pre-trading expenses: Costs from up to five years before you started trading can usually be claimed. If you’ve just started up, see our business start-up support.
- Accountancy and bookkeeping fees
- Bank and card charges on your business account
- Software and app subscriptions
- Insurance and professional subscriptions
- Training that updates skills you already use
- The business share of your phone and broadband
- Capital allowances: Equipment such as a laptop, tools or machinery isn’t deducted as an ordinary expense. Instead, the Annual Investment Allowance lets most sole traders deduct the full cost in the year they buy it.
If you think you may have missed any, an accountant can review them for you. It’s a good reason to have your Self Assessment prepared professionally.
Keeping records for your sole trader expenses
HMRC expects you to be able to back up what you claim. Keep:
- Receipts and invoices for what you buy
- Bank statements
- Your mileage log
- A record of your monthly hours at home, if you use the flat rate.
You should keep these for at least five years after the 31st January deadline for the relevant tax year. A separate business bank account makes everything simpler, and bookkeeping software can capture receipts as you go. See our guide to the best bookkeeping software for small businesses, or ask about our bookkeeping service.
A note on Making Tax Digital
If your qualifying self-employment income is over £50,000, you must keep digital records and send quarterly updates to HMRC. The threshold falls to £30,000 from April 2027, so more sole traders will be brought into the tax going digital framework. Learn more about Making Tax Digital support.
Where do sole trader expenses go on your tax return?
You report your income and expenses in the self-employment pages of your Self Assessment return (SA103). Your total allowable expenses are deducted from your income to give your taxable profit.
For a full timeline, see our Self Assessment deadlines guide.
Frequently asked questions about sole trader expenses
What expenses can I claim as a sole trader?
Any cost incurred wholly and exclusively for your business, such as stock, travel, insurance, software, marketing and professional fees. Costs with a personal element can be claimed for the business share only.
What is the most overlooked tax deduction for sole traders?
Often, it’s pre-trading expenses, capital allowances on equipment, and the business share of phone, broadband and home costs.
Can I claim petrol on tax as a sole trader?
If you claim actual vehicle costs, you can claim the business share of fuel. If you use the mileage rate, you can’t claim fuel as well.
What are five examples of a business expense?
Software subscriptions, insurance, advertising, accountancy fees and business travel.
Do HMRC ask for proof of mileage?
They can ask to see your records if they check your return, so keep a log of dates, destinations, purposes and miles.
Get help with your sole trader expenses
Not sure what you can claim, or worried you’ve missed something? Tax Driven Accountants can review your sole trader expenses and prepare your return so it’s accurate and on time.
Find out how we can help with your Self Assessment tax return or contact us on 0800 999 1800. Alternatively, send us an enquiry and we’ll make sure you’re claiming everything you’re entitled to.
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Last updated: 26th October 2026
