Self-Employed Expenses
Last reviewed: April 2026
As a sole trader, you pay tax on profit — not turnover. Every allowable expense reduces your taxable profit and therefore your tax and NI bill. Here is a complete guide to what you can claim in 2026/27.
At a glance
- ✓You can only claim expenses that are 'wholly and exclusively' for business purposes
- ✓HMRC mileage rate is 45p/mile for the first 10,000 business miles, then 25p
- ✓Home office costs can be claimed as a flat rate or actual proportion
- ✓Keep records for at least 5 years after the Self Assessment deadline
Allowable expense categories
Office costs
Stationery, printer ink, postage, software subscriptions (e.g. accounting software, Adobe, Microsoft 365), office furniture.
Travel and mileage
Business mileage in your own car (at HMRC approved rates), train and bus fares for business journeys, parking, tolls. Commuting to a permanent workplace does not qualify.
Premises and home office
Rent and business rates for business premises. For home office, use HMRC simplified flat rate or actual proportion of heating, electricity, broadband, and council tax.
Stock and materials
Cost of goods you resell, raw materials, packaging. Only the cost price counts — not the selling price.
Marketing and advertising
Website hosting, domain names, Google Ads, social media advertising, business cards, signage.
Professional fees
Accountant fees, legal costs directly related to the business, trade association subscriptions, professional indemnity insurance.
Financial costs
Bank charges, business loan interest (not capital repayments), factoring charges. Note: interest on personal loans for business use is partially deductible.
Clothing
Protective or specialist uniforms (e.g. high-visibility vests, chef whites). You cannot claim for regular clothing you could wear outside of work, even if bought specifically for work.
HMRC approved mileage rates
| Vehicle type | First 10,000 miles | Above 10,000 miles |
|---|---|---|
| Car or van | 45p | 25p |
| Motorcycle | 24p | 24p |
| Bicycle | 20p | 20p |
Worked example — mileage
Scenario: 8,000 business miles in the year using a personal car.
- All 8,000 miles at 45p = £3,600 deductible expense
- Taxable profit reduced by £3,600
- Basic-rate taxpayer saves: £3,600 × 20% = £720 in Income Tax
- Class 4 NI saving: £3,600 × 6% = £216
- Total tax + NI saving: £936
Simplified expenses (cash basis) vs traditional accounting
| Factor | Cash basis | Traditional accruals |
|---|---|---|
| Income recorded when | Received | Earned (invoice date) |
| Expenses recorded when | Paid | Incurred |
| Capital items | AIA in full immediately | Capital allowances over time |
| Who can use it | Turnover under £150,000 | All sole traders |
| Complexity | Simpler | More complex |
Common questions
What does 'wholly and exclusively' mean for business expenses?
HMRC allows expenses that are incurred wholly and exclusively for the purposes of your trade. If an expense has both a business and personal element (like a mobile phone), you can usually claim the business proportion only.
Can I claim the cost of a laptop or equipment?
Yes. Capital items used in your business qualify for the Annual Investment Allowance (AIA), which gives 100% relief in the year of purchase. For most sole traders, this means the full cost is deductible in the year you buy it.
Can I claim mileage if I use my personal car for business?
Yes. Use HMRC's approved mileage rates: 45p per mile for the first 10,000 business miles each year, 25p per mile above that. Keep a mileage log showing dates, destinations, and purposes.
Can I claim for working from home?
Yes. Self-employed people can either use HMRC's flat rate (£10/month for 25–50 hours, £18/month for 51–100 hours, £26/month for 101+ hours per month) or calculate the actual proportion of home costs attributable to business use.
Do I need receipts for every expense?
HMRC expects you to keep records for at least 5 years after the 31 January filing deadline. Receipts, bank statements, invoices, and mileage logs all count. Digital records are acceptable.
Sources
Estimate your self-employed tax bill
Enter your income and expenses to see your estimated Income Tax, Class 4 NI, and take-home profit.
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