Disclaimer: This article is for general information only. It does not constitute financial or tax advice. Always speak to a qualified accountant or tax professional for guidance specific to your circumstances.
When HMRC calculates your tax bill, it deducts your allowable business expenses from your income first. That means every legitimate expense you claim reduces the amount you’re taxed on.
Most sole traders know this in theory. In practice, many either don’t claim everything they’re entitled to — out of caution or confusion — or claim things they shouldn’t, which creates problems the other way.
This guide cuts through both. Plain English. No jargon. No nonsense.
The golden rule
HMRC’s rule is simple: expenses are allowable if they are incurred ‘wholly and exclusively for the purpose of your business.’ If you can prove the cost was a genuine business cost — and keep the receipt — you can generally claim it.
Keep every receipt. Even small ones. A year of small receipts adds up to real money.
What you CAN claim
Your phone and internet
If you use your personal phone for business, you can claim the business proportion of your bill. If 50% of your calls are business-related, claim 50%. Keep it reasonable and consistent.
If you have a dedicated business phone or broadband line, you can claim the full cost.
Vehicle and travel costs
Two approaches here. The simpler one for most sole traders: claim the HMRC approved mileage rate — currently 45p per mile for the first 10,000 business miles each year, 25p per mile after that. Keep a mileage log.
Alternatively, claim actual costs: fuel, insurance, servicing, MOT — but only the business proportion. If your car is 60% used for business, claim 60% of costs.
You cannot claim travel between your home and a regular place of work. You can claim travel to client sites, suppliers, or for business errands.
Tools, equipment and kit
If you buy tools, equipment, or kit specifically for your business — whether that’s a set of spanners, a professional camera, or a laptop — you can usually claim the full cost in the year you buy it under the Annual Investment Allowance.
Equipment you use partly for business and partly personally? Claim the business proportion.
Professional subscriptions and memberships
Subscriptions to industry bodies, trade associations, and professional memberships that are relevant to your work are claimable. So are relevant trade publications and industry magazines.
Training and development
Training that improves your skills in your existing trade is an allowable expense. A plumber taking a new boiler installation course. A personal trainer updating their first aid certificate. A hairdresser doing a specialist colour training day.
Note: training for an entirely new business venture is not claimable.
Working from home
If you work from home, you can claim a flat rate to cover additional household costs — currently £10 per month if you work between 25–50 hours per month from home, up to £26 per month for 101+ hours. You can also calculate the actual cost if that works out higher.
Marketing and advertising
Website costs, business cards, flyers, advertising spend, social media promotion — all claimable. If you pay for a scheduling or booking platform, that’s claimable too.
Insurance
Business insurance — public liability, professional indemnity, van insurance if used for business — all allowable.
Protective clothing with your logo
Branded workwear — a uniform, polo shirt with your logo, safety boots required for your work — is claimable. Normal clothing that you wear to work but could wear anywhere else is not.
What you CANNOT claim
Entertaining clients or potential clients is not allowable as a business expense — HMRC is strict on this. Taking a client to lunch or buying them a gift is a grey area and generally not claimable.
Normal clothing is not claimable, even if you only wear it for work. The legal test is whether the clothing is a uniform or protective, not whether you bought it for work.
Personal expenses are never claimable, even partially, unless there’s a genuine business use element.
The one habit that makes this effortless
Open a separate business bank account — even a free one like Monzo Business, Starling or Tide. Run all business income and expenses through it. At tax time, every business cost is already in one place, clearly separated from your personal spending.
This single habit saves hours at self-assessment time and makes your expense claims bulletproof.
Important: This guide covers common expenses for UK sole traders. Tax rules can be complex and individual circumstances vary. Always speak to a qualified accountant before making tax decisions.
Follow Appt In for weekly guides covering tax, business admin, and how to run a smarter small business. All free. No fluff.