24 August 2026
Self-employed allowable expenses: what you can (and can't) claim
A complete guide to allowable expenses for UK sole traders: office costs, mileage rates, use of home, what's excluded, and how much tax claiming them actually saves.
If you're a sole trader, allowable expenses reduce the profit you pay Income Tax and National Insurance on. They're not a direct refund: claiming £500 of allowable expenses doesn't put £500 back in your pocket, it reduces your taxable profit by £500, saving you tax at whatever your marginal rate happens to be.
How much do allowable expenses actually save you?
If your profit is below £50,270, your marginal rate is likely 26%: 20% Income Tax plus 6% Class 4 National Insurance (Scottish rates differ slightly for the Income Tax portion). At that rate, £500 of allowable expenses saves you £130 in tax, not £500. Above £50,270, the combined marginal rate rises to 42% (40% Income Tax plus 2% Class 4 National Insurance), so the same £500 saves £210. Either way, it's real money, just not pound-for-pound.
Common allowable expenses
- Office costs: stationery, phone and internet bills (business proportion), software subscriptions
- Travel: fuel, parking, train and bus fares for business journeys, though not your regular commute to a single permanent workplace
- Stock and materials used to make what you sell
- Staff costs, including salaries and subcontractor payments
- Marketing and website costs
- Professional fees: accountancy, business insurance, bank charges and interest on business loans
- Training that updates skills you already use in your existing business, though not training for a new trade or qualification
Mileage: the simplified method
Instead of tracking actual vehicle running costs, most sole traders use HMRC's simplified mileage rates: 55p a mile for the first 10,000 business miles each tax year in a car or van, 25p a mile after that, 24p a mile for motorcycles, and 20p a mile for bicycles.
Once you choose the mileage method for a particular vehicle, you need to stick with it for as long as you use that vehicle in the business. You can't claim mileage and separately claim fuel, servicing, or capital allowances on the same vehicle.
Working from home
If you work from home, you can use HMRC's simplified flat rate instead of working out actual costs: £10 a month for 25 to 50 business hours, £18 a month for 51 to 100 hours, and £26 a month for 101 or more hours. If your actual additional costs (a proportion of heating, electricity, and similar bills) are higher, you can claim those instead, working out the business proportion on a reasonable basis, such as by room count or hours used.
What you can't claim
- Client entertaining, meals, or gifts
- Fines and penalties, including parking tickets
- Everyday clothing, even if you only wear it for work; only genuine uniforms or protective clothing count
- Personal expenses with no business purpose
- The upfront cost of equipment or vehicles as a simple expense; these are usually claimed through capital allowances instead, most equipment qualifying for the Annual Investment Allowance, currently up to £1,000,000 of qualifying spending a year
If your self-employment income is small, the £1,000 trading allowance can be simpler than itemising expenses at all. It's an alternative to claiming actual expenses, not something you add on top, so it's worth comparing which gives you the better result. See our guide to self-employed tax for how the trading allowance works.
Keeping records
Keep receipts and records for at least 5 years after the 31 January Self Assessment deadline for the relevant tax year. If you're within Making Tax Digital for Income Tax, you'll also need to keep digital records throughout the year rather than gathering everything at the end. See our guide to self-employed tax for who that currently applies to.
Our Self-Employed Tax Calculator works out Income Tax and National Insurance on your profit figure, so subtract your allowable expenses from turnover first to get the number to enter.