As a sole trader, you can deduct allowable business expenses from your turnover before calculating your taxable profit. The rule is simple: an expense must be incurred "wholly and exclusively" for the purposes of your trade. Personal expenses and mixed-use items are not fully deductible.

Office and administrative costs

  • Stationery and printer consumables
  • Postage and couriers
  • Telephone and internet bills (business proportion)
  • Office rent and service charges
  • Business software subscriptions (accounting, project management, design tools)
  • Magazines and trade publications relevant to your work

Travel and transport

  • Fuel for business journeys (not commuting to a regular workplace)
  • Train, bus, and air fares for business trips
  • Parking charges during business travel
  • Congestion charges and toll fees on business journeys
  • Accommodation for overnight business trips
  • Meals during overnight business travel

You can use HMRC's approved mileage rates instead of claiming actual vehicle costs. For 2025/26: 45p per mile for the first 10,000 business miles in a car; 25p per mile thereafter.

Working from home

If you work from home, you can claim a proportion of household costs. You have two options:

  1. Simplified expenses: HMRC's flat rates based on hours worked per month at home (£10 for 25 to 50 hours, £18 for 51 to 100 hours, £26 for 101 or more hours)
  2. Actual costs: Calculate the business proportion of rent, mortgage interest, utilities, and council tax based on the number of rooms and hours used

Staff and subcontractor costs

  • Wages and salaries paid to employees
  • Payments to subcontractors or freelancers
  • Employer's National Insurance contributions
  • Pension contributions you make on behalf of staff
  • Staff training and development costs

Equipment and assets

You can claim Annual Investment Allowance (AIA) on most plant and machinery, allowing 100% deduction in the year of purchase up to £1 million. For smaller purchases like laptops, phones, and cameras used exclusively for work, you can claim the full cost in the year.

Professional and financial fees

  • Accountant and bookkeeper fees
  • Solicitor fees for business matters
  • Bank charges on your business account
  • Business insurance premiums
  • Professional body membership subscriptions
  • Trade union subscriptions

Marketing and advertising

  • Website design and hosting
  • Online advertising (Google Ads, social media)
  • Business cards and printed materials
  • Trade show and exhibition costs
  • Samples and promotional gifts (under £50 per recipient per year)

What you cannot claim

  • Everyday clothing (even if worn only for work)
  • Personal food and drink (other than during overnight business travel)
  • Fines and penalties (parking tickets, HMRC penalties)
  • Entertainment costs (taking clients to lunch, events)
  • Your own wages or drawings
Mixed-use expenses

If an expense is partly personal and partly business (such as a phone bill), you can only claim the business proportion. Keep a record of how you calculated the split.

Disclaimer

This guide provides general information only and does not constitute financial, tax, or legal advice. For your specific situation, consult a qualified accountant. Find one via our accountant directory.