As a sole trader, claiming legitimate business expenses is one of the most effective ways to reduce your tax bill. Understanding what you can claim could save you hundreds—or even thousands—of pounds each year. Here's your comprehensive guide to allowable expenses.
What Are Allowable Expenses?
Allowable expenses are costs that are wholly and exclusively for business purposes. You deduct these from your income before calculating the tax you owe. The key rule is that the expense must be necessary for running your business—not a personal expense disguised as a business one.
Common Expenses You Can Claim
1. Office and Premises Costs
- Rent for business premises
- Business rates and utility bills
- Property repairs and maintenance
- Office furniture and equipment
- Working from home: A proportion of household costs (heating, electricity, internet)
💡 Working From Home Tip
You can use HMRC's simplified expenses or calculate the actual proportion of home costs used for business. The simplified rate is £6 per week (£26/month) without needing receipts.
2. Travel and Vehicle Costs
- Vehicle insurance, fuel, and repairs (business portion)
- Mileage allowance (45p per mile for first 10,000 miles, 25p thereafter)
- Parking fees and congestion charges
- Train, bus, and taxi fares for business travel
- Hotel and meal costs for overnight business trips
3. Staff and Labour Costs
- Employee wages and salaries
- Subcontractor costs
- Employer's National Insurance contributions
- Pension contributions for employees
- Training courses related to your business
4. Marketing and Professional Services
- Website hosting and domain costs
- Advertising and marketing materials
- Accountancy fees
- Legal and professional fees
- Trade subscriptions and memberships
5. Equipment and Technology
- Computers, laptops, and tablets
- Software subscriptions (accounting, design, etc.)
- Phone bills (business portion)
- Tools and machinery
What You Cannot Claim
- ❌ Personal clothing (even if you only wear it for work)
- ❌ Commuting costs to your regular place of work
- ❌ Fines and penalties (parking tickets, HMRC penalties)
- ❌ Entertainment costs (client meals, hospitality)
- ❌ Personal phone or internet usage
How to Track Your Expenses
- Keep all receipts: Digital copies are acceptable—use apps like Receipt Bank or Dext
- Separate business and personal accounts: A dedicated business bank account makes tracking easier
- Use accounting software: Cloud software like Xero or QuickBooks automates categorisation
- Record expenses regularly: Don't leave it until year-end
Need Help Maximising Your Deductions?
Many sole traders miss out on legitimate expenses simply because they don't know what to claim. At FFC Accountants, we help self-employed clients identify every allowable deduction and ensure their tax returns are accurate and compliant.
