Guides / Allowable expenses for the self-employed
Guide
Allowable expenses for the self-employed
What a sole trader can and cannot deduct from their income, with the simplified flat rates for mileage and working from home, and examples of the records you need.
9 min read · Updated October 2026 · Reviewed by qualified accountants
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In short
- Allowable expenses are costs incurred wholly and exclusively for the business.
- Claiming them reduces your taxable profit, so reduces your tax and National Insurance.
- You cannot claim your commute, client entertainment or personal costs.
- Simplified flat rates are available for vehicles and working from home.
- Keep invoices and receipts for at least five years after the filing deadline.
The basic rule
You can deduct a cost from your income if it was incurred wholly and exclusively for your business. If a cost is partly personal, you can claim only the business share. For example, a phone used 70% for work allows 70% of the bill.
Expenses reduce your profit, and your tax and Class 4 National Insurance are charged on profit rather than turnover, so every valid claim saves you money.
Allowable expense categories
| Category | Examples |
|---|---|
| Office costs | Stationery, phone, internet, software subscriptions |
| Travel | Fuel, parking, train and bus fares for business journeys, hotels |
| Clothing | Uniforms and protective clothing, not everyday clothes |
| Stock and materials | Goods you buy to resell, materials used in your work |
| Staff costs | Wages, subcontractor payments, employer National Insurance |
| Financial costs | Business insurance, bank charges, interest on business loans |
| Marketing | Advertising, website costs, business cards |
| Professional fees | Accountant, solicitor, trade body subscriptions |
| Training | Courses that update skills you already use in your business |
| Premises | Rent, rates, utilities for business premises |
Working from home
If you work from home you can claim a proportion of household costs, or use the simplified flat rate based on the hours you work at home each month:
| Hours worked at home a month | Flat rate a month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
The flat rate covers heating, lighting and similar costs. It is simple, but you may prefer to calculate actual costs if they are higher.
Vehicles and mileage
You can claim business use of a car, van or motorcycle either by tracking actual costs or by using simplified mileage rates:
| Vehicle | Rate |
|---|---|
| Cars and vans, first 10,000 business miles | 45p per mile |
| Cars and vans, over 10,000 miles | 25p per mile |
| Motorcycles | 24p per mile |
| Bicycles | 20p per mile |
Keep a mileage log showing date, journey, purpose and miles. Your regular commute from home to a permanent workplace is not allowable, but trips to client sites usually are.
Equipment and capital allowances
Larger items such as machinery, a computer or a van are treated as capital purchases. You cannot deduct depreciation, but you can claim capital allowances. The Annual Investment Allowance lets most small businesses deduct the full cost of qualifying equipment in the year of purchase, up to a high annual limit.
What you cannot claim
- Your commute to your normal place of work
- Client entertainment and gifts that are not small, branded items
- Fines and penalties, including parking fines
- Personal clothing, food and everyday living costs
- Depreciation, which is replaced by capital allowances
- Costs that are mainly for personal use
Not sure?
If a cost has both business and personal use, claim only the business share and keep a note of how you worked it out.
Keeping records
Keep a receipt, invoice or bank statement for every claim. HMRC expects you to hold records for at least five years after the 31 January filing deadline. A simple spreadsheet or app that you update monthly is usually enough.
Written and reviewed by the Accotax tax team
Accotax is a London firm of qualified accountants and tax consultants, on the ICAEW approved employers list. Our team prepares Self Assessment, landlord and company tax returns every day, and each guide is checked against GOV.UK before it is published and updated every tax year.
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Questions, answered.
No. Travel between home and a permanent workplace is not allowable, but travel to client sites usually is.
Yes. Keep receipts and records for at least five years after the filing deadline.
You do not need to, because income of £1,000 or less is tax-free. If your income is higher, compare the allowance with your real expenses.
Costs incurred in the seven years before you started can often be claimed as if you incurred them on the first day of trading.
Yes, the business share. If you use your phone half for work, you can claim 50% of the bill.
Reasonable subsistence on a business trip away from your normal place of work is generally allowable. Everyday lunches are not.
Next steps
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