What expenses can sole traders claim? The complete guide
Claiming the right expenses can significantly reduce your tax bill. Here's a comprehensive, plain English guide to what sole traders can and can't claim.
One of the most effective ways to reduce your tax bill as a sole trader is to make sure you're claiming every legitimate expense. Yet many self-employed people underclaim — either because they're not sure what's allowed, or because they're worried about getting it wrong. This guide covers the main categories clearly and simply.
The golden rule
To be tax-deductible, an expense must be "wholly and exclusively" for the purpose of your business. That means if you buy something that's partly for personal use and partly for business, you can usually only claim the business portion.
Office and premises costs
If you rent a commercial premises for your business, those costs are fully deductible. If you work from home, you can claim a proportion of your household costs — things like heating, electricity, and broadband — based on the number of rooms you use for work and how many hours you work there.
Alternatively, HMRC offers a simplified flat rate for home working: £10/month for 25–50 hours worked at home, £18/month for 51–100 hours, and £26/month for over 100 hours.
Travel and vehicles
Business travel is deductible. This includes:
- Mileage — 45p per mile for the first 10,000 miles, 25p after that (if using your own vehicle)
- Public transport — train, bus, taxi fares for business trips
- Parking — for business trips (not commuting)
- Congestion charges and tolls — for business journeys
Note: travel between your home and a regular place of work is considered commuting and is not deductible.
Equipment and tools
Anything you buy to use in your business — laptops, phones, tools, equipment, machinery — can be claimed as a capital allowance. In most cases, sole traders can claim the full cost in the year of purchase using the Annual Investment Allowance.
If you use something for both personal and business use (like a phone), you can claim the business-use proportion.
Professional fees and subscriptions
- Accountant or bookkeeper fees (like TaxChill!)
- Professional body memberships relevant to your work
- Trade subscriptions and industry publications
- Software subscriptions used for your business
Marketing and advertising
- Website costs — hosting, domain, design
- Advertising — Google Ads, social media ads, print
- Business cards and promotional materials
- Photography or video for business use
Training and development
You can claim training costs that are directly related to your current business — courses, workshops, books, and online learning that develop skills you use in your work. You cannot claim for training that would qualify you for a new profession.
Bank charges and finance costs
- Business bank account charges
- Credit card fees on business purchases
- Interest on business loans
Staff costs
If you employ people or use subcontractors, those costs are deductible — including their wages, National Insurance contributions, and pension contributions you make on their behalf.
What you can't claim
- Personal clothing (unless it's a uniform or specialist protective equipment)
- Food and drink (with very limited exceptions for overnight business trips)
- Client entertainment
- Fines and penalties
- Personal travel
Keeping good records
HMRC requires you to keep records of all your expenses for at least 5 years. For every expense you claim, you should have a receipt or invoice to back it up. Digital records are fine — a photo of a receipt counts.
With TaxChill, we help you categorise your expenses correctly every quarter, so you're always claiming what you should be — and nothing you shouldn't.
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