Self-Employed Allowable Expenses: What You Can Claim for Tax in the UK

Understanding self-employed allowable expenses can help you calculate your taxable profit correctly and avoid paying more Income Tax than necessary. If you are a sole trader or an individual member of a business partnership, you can generally deduct qualifying business costs from your trading income before working out your taxable profit. That final profit figure then feeds into the wider Income Tax calculation explained in our ultimate guide to personal tax in the UK.

However, not every cost connected with your business is deductible. HMRC expects expenses to be incurred for genuine business purposes, with personal expenditure excluded. This guide explains the main expenses you can claim, the restrictions that apply and the records required under the 2026/27 UK tax rules.

Self Employed Expenses: What Can You Claim?

Self employed expenses are business costs that can be deducted when calculating your taxable trading profit, provided they meet HMRC’s rules. In general, the expense must relate to running your business, and where a cost has both business and personal use, you can normally claim only the identifiable business proportion.

Common allowable business expenses can include office costs, business travel, working-from-home costs, stock and materials, staff costs, professional fees, insurance, advertising, relevant training and certain financial costs. Different rules can apply to equipment, vehicles and other capital expenditure.

Claiming an allowable expense does not usually mean HMRC refunds the entire cost. Instead, the allowable amount normally reduces the trading profit on which your Income Tax is calculated.

Self Employed Allowable Expenses List

Whether a particular cost qualifies depends on what it was used for and the accounting rules that apply to the business. Personal expenditure is not deductible merely because it was paid from a business bank account.

What Are Self-Employed Allowable Expenses?

For a sole trader, these deductions are generally reported as part of the business expenses used to calculate taxable self-employment profit. This is why terms such as self employed expenses, allowable business expenses and self-employed tax deductions often describe the same underlying concept, although the precise tax treatment depends on the type of expenditure.

Self-employed allowable expenses are costs incurred for the purpose of running your trade. Most expenses must satisfy the “wholly and exclusively” test, meaning the reason for incurring the cost must be connected with your business rather than your private life.

Allowable expenses reduce taxable profit rather than providing a full refund. For example, if your business earns £50,000 and has £12,000 of allowable costs, the starting trading profit is £38,000 before other tax adjustments.

Where an expense has both business and private use, you can normally claim only the identifiable business proportion. You should use a fair and consistent method and retain evidence showing how the split was calculated.

Are Self Employed Expenses the Same as Claiming VAT Back?

No. Claiming an allowable business expense for Income Tax and reclaiming VAT are separate tax treatments. An expense may reduce taxable business profit without necessarily creating a VAT repayment.

If your business is VAT registered, whether VAT can be reclaimed depends on the VAT rules applying to the purchase and how it is used. Keep VAT treatment separate from the calculation of allowable self-employed expenses for Income Tax.

Office Costs, Phone Bills and Software

Common allowable business expenses include stationery, postage, printing, printer supplies and software used in your trade. Regular software subscriptions and licences renewed through ongoing payments can generally be deducted as business expenses.

You can also claim the business proportion of telephone and internet bills. If a mobile phone is used 60% for business and 40% privately, only the 60% business element should normally be included.

The treatment of equipment such as computers and printers depends partly on your accounting method. Under the cash basis, qualifying equipment is generally deducted as an expense, except for cars. Businesses using traditional accounting may need to claim capital allowances instead.

Business Premises and Working From Home

You can claim costs relating to dedicated business premises, including rent, business rates, utilities, insurance, security, repairs and maintenance. Costs relating to buying or improving property are normally treated separately from routine expenses.

If you work from home, you can claim a reasonable proportion of costs such as heating, electricity, rent, mortgage interest, council tax and internet use. The calculation should reflect factors such as the space used, the time spent working and whether the area also has a private purpose.

Alternatively, eligible sole traders and qualifying partnerships can use HMRC simplified expenses. The monthly homeworking rates remain:

• £10 per month for 25 to 50 hours of business use.
• £18 per month for 51 to 100 hours.
• £26 per month for 101 hours or more.

These flat rates do not include telephone or internet costs, for which you can separately claim the appropriate business proportion. This differs from the position for employees, who follow a distinct process to claim work-from-home tax relief where their employer requires them to work remotely.

Travel, Vehicles and Business Mileage

Qualifying travel costs can include train fares, taxis, flights, hotel accommodation, parking and meals during necessary overnight business trips. Travel between business appointments or to temporary work locations may also qualify.

You cannot normally claim the cost of ordinary travel between your home and a permanent or regular business base. Fines and penalties, including parking and speeding fines, are not allowable.

For the 2026/27 tax year, the simplified mileage rates for eligible self-employed vehicle expenses are:

• 55p per business mile for the first 10,000 miles for cars and goods vehicles.
• 25p per business mile after the first 10,000 miles for cars and goods vehicles.
• 24p per business mile for motorcycles.

You can instead use the actual-cost method and claim the business proportion of fuel, insurance, servicing, repairs and other vehicle expenses. Once simplified mileage is used for a vehicle, you must generally continue using that method while the vehicle remains in the business.

Actual Costs vs Simplified Expenses

Sole traders and qualifying partnerships can use simplified expenses for certain costs instead of calculating the exact business proportion of every expense. Simplified expenses can apply to eligible vehicle costs, working from home and living at business premises.

For vehicles, you generally choose between the applicable mileage flat rate and claiming the appropriate business proportion of actual running costs. You cannot normally use both methods for the same vehicle for the same costs, and restrictions apply if capital allowances have already been claimed for that vehicle.

Stock, Materials and Staff Costs

You can claim self-employed expenses for stock purchased for resale, raw materials and direct costs of producing goods. Personal withdrawals of stock and goods taken for private use must not be treated as business expenditure without an appropriate adjustment.

Qualifying staff costs can include wages, salaries, bonuses, employer National Insurance contributions, workplace pension contributions, agency fees and relevant employee training. Payments for personal domestic help, such as a nanny or private cleaner, are not deductible unless the work genuinely relates to the business.

Professional Fees, Finance Costs and Insurance

Accountancy fees, legal advice, professional services and business insurance can normally be included within HMRC self-employed expenses where they relate to the trade. You may also claim qualifying bank charges, credit-card charges, overdraft costs, hire-purchase interest and interest on business borrowing.

Legal and professional costs connected with purchasing property, machinery or another capital asset are not usually treated as ordinary day-to-day expenses. This distinction between self-employed business costs and personal employment costs is worth keeping in mind if you also have PAYE income, since tax relief for job expenses follows a separate, stricter set of rules for employees. They may form part of the asset’s capital cost or receive relief under separate rules.

Marketing, Training and Professional Subscriptions

Advertising, website running costs, mailshots, free samples and other genuine marketing expenses are generally allowable. Relevant trade-journal subscriptions and membership fees paid to professional or trade organisations may also qualify.

Client entertainment and hospitality are normally disallowed, even where entertaining customers is intended to generate future business. Political donations, gym memberships and most business gifts are also restricted.

Training costs can qualify where the course improves existing business skills, keeps you up to date with industry developments or provides relevant administrative knowledge. Training that prepares you to start a different business or enter an unrelated industry is not normally allowable.

Capital Allowances and Business Equipment

Capital allowances may apply to assets kept for use in the business, including machinery, tools, furniture and certain vehicles. The Annual Investment Allowance generally permits businesses to deduct the full qualifying cost of most plant and machinery, subject to the permanent £1 million annual limit.

Cars do not normally qualify for the Annual Investment Allowance and follow separate rules based partly on their emissions. From 6 April 2026, the main writing-down allowance rate for Income Tax businesses is 14%, reduced from 18%, while the special-rate pool remains at 6%.

Pre-Trading Expenses

Some costs incurred before your business officially started can be claimed once trading begins. Qualifying pre-trading expenditure must have been incurred within seven years before commencement and must be a cost that would have been allowable had it been incurred after the trade started.

Examples may include initial advertising, website costs, accountancy advice and certain supplies. Qualifying expenditure is treated as incurred on the first day of trading.

Expenses You Cannot Claim

Costs that are normally excluded include:

• Private or personal expenditure.
• Everyday clothing, even when bought for work.
• Client entertainment and hospitality.
• Ordinary commuting.
• Fines and penalties.
• Personal wellbeing or gym costs.
• The private proportion of mixed-use expenses.

Allowable vs Non-Allowable Self Employed Expenses

Employees rather than the self-employed have a separate route for clothing costs, since they can often claim flat rate expenses for work clothing and tools instead of deducting actual costs.

A payment does not become deductible simply because it was made from a business bank account. Its purpose and tax treatment must still be considered.

What Self Employed Expenses Can You Claim on Self Assessment?

If you complete Self Assessment as a sole trader, allowable business expenses are used when calculating the taxable profit from your self-employment. You should identify the expenses that relate to the business and report the appropriate figures through your Self Assessment return or, where applicable, through Making Tax Digital for Income Tax.

1. Keep records of your business income and expenses.
2. Separate business costs from personal expenditure.
3. Calculate the allowable business proportion of mixed-use costs.
4. Use the correct treatment for vehicles, equipment and capital expenditure.
5. Include the appropriate allowable expense figures when calculating your taxable business profit.

You normally do not send receipts with your Self Assessment return, but you should retain supporting records in case HMRC asks you to substantiate an expense claim.

Keeping Records for the 2026/27 Tax Year

You should keep receipts, invoices, bank statements, mileage logs and calculations supporting every expense claimed. Self-employed taxpayers must generally retain records for at least five years after the 31 January filing deadline for the relevant tax year.

From 6 April 2026, sole traders and landlords with qualifying gross income above £50,000 are required to follow Making Tax Digital for Income Tax, unless exempt. This includes maintaining digital records and submitting quarterly updates using compatible software. The threshold reduces to more than £30,000 from April 2027.

Making Tax Digital for Self Employed Expenses

Making Tax Digital for Income Tax is being introduced in stages. Sole traders and landlords with qualifying income above £50,000 are brought into the rules from 6 April 2026, those above £30,000 from 6 April 2027, and those above £20,000 from 6 April 2028, subject to the applicable conditions and exemptions.

Those required to use Making Tax Digital must use compatible software to create and maintain digital records of relevant self-employment or property income and expenses and submit the required updates to HMRC.

Self-Employed Allowable Expenses Case Study

Emma, a self-employed marketing consultant, visited our Wimbledon office because she was unsure which self-employed allowable expenses she could claim on her Self Assessment tax return. She had been working from home, travelling to client meetings and paying for software subscriptions, but worried that claiming the wrong expenses could trigger HMRC questions or cause her to pay the wrong amount of tax.

After reviewing Emma’s records, we explained which allowable business expenses met HMRC’s “wholly and exclusively” rule and identified several legitimate costs she had overlooked, including the business proportion of her phone and internet bills, qualifying homeworking expenses, software subscriptions and business travel. We also discussed the differences between simplified mileage and actual vehicle costs, helping her choose the most appropriate method for her circumstances.

During the consultation, we emphasised the importance of keeping accurate receipts, invoices and mileage records, particularly with the introduction of Making Tax Digital for Income Tax. By organising her records correctly and understanding which expenses were genuinely deductible, Emma gained confidence that her tax return would be both accurate and compliant.

By the end of the meeting, Emma had a clearer understanding of HMRC self-employed expenses, knew how to maximise legitimate tax relief and was better prepared to manage her business finances throughout the tax year.