Updated 7 November 2026: From 6 April 2026, the mileage rate for the first 10,000 business miles is 55p a mile. The Autumn Budget on 28 October 2026 announced that, from 6 April 2027, the rate above 10,000 miles rises from 25p to 35p, and the trading allowance rises from £1,000 to £3,000. See our post on the Autumn Budget 2026.
Every allowable expense you claim reduces your taxable profit. For example, if your profits are between £12,570 and £50,270, each £100 of expenses saves you £26: £20 of Income Tax and £6 of Class 4 National Insurance (Scotland has different Income Tax rates, and other income or reliefs can change the figure). So it is worth knowing what you can claim.
This post covers the main expenses for sole traders, the ones you can't claim, and two simpler ways to claim for working from home and mileage.
The basic rule
An expense must be for your business. If something is used partly for the business and partly for you, you can only claim the business part.
For example, if your phone bill is £200 and £70 of it is business calls, you claim £70.
Money you take out of the business for yourself (drawings) is not an expense.
What you can claim
HMRC groups allowable expenses like this:
Office costs: stationery, phone and internet (business share)
Travel: fuel, parking, train and bus fares for business journeys
Clothing: uniforms and protective clothing
Staff: wages and subcontractors
Stock and materials: goods you buy to sell or use in your work
Financial costs: business insurance, bank charges
Premises: rent, business rates, heating and lighting for a business property
Marketing: advertising and website costs
Subscriptions: trade bodies and professional journals
Training: courses that keep your current skills up to date
Equipment you keep, such as a laptop or tools, can also reduce your tax. How depends on whether you use the cash basis or traditional accounts.
What you can't claim
Entertaining clients, such as meals or drinks
Everyday clothing, even if you only wear it for work
Travel between home and a regular workplace, which counts as commuting
Fines and penalties, such as parking fines
The personal part of anything you also use privately
Working from home
You can claim a share of your household costs, such as heating, electricity, Council Tax and rent or mortgage interest. Work out the business share in a reasonable way, for example by the number of rooms and the time you use one for work.
Or you can use HMRC's flat rate, based on the hours you work at home each month:
25 to 50 hours: £10 a month
51 to 100 hours: £18 a month
101 hours or more: £26 a month
The flat rate does not cover phone and internet. You can claim the business share of those separately.
Mileage
If you use your own car or van for business trips, you can claim a flat rate per mile in place of the actual running costs:
45p a mile for the first 10,000 business miles in the year
25p a mile after that
24p a mile for motorcycles
You can still claim parking on top. Once you use the flat rate for a vehicle, you must keep using it for as long as you use that vehicle in the business. You can't use the flat rate for a vehicle you have already claimed capital allowances on, or deducted the cost of as an expense. Some vehicles, such as black cabs, can't use it at all. Keep a log of your business journeys.
The £1,000 trading allowance
If your total business income before expenses is £1,000 or less, you usually don't need to report it. If it is more, you can deduct a flat £1,000 instead of your actual expenses. You can't claim both, and the allowance can't create a loss. It can't be used for income from your employer or from a company you are connected with.
Keep your records
Keep receipts and records for at least five years after the 31 January filing deadline for that tax year. HMRC can ask to see them.
Summary
You can claim costs that are for your business, and the business part of costs you share with your personal life. Entertaining, everyday clothing and commuting are not allowed. Flat rates can make working from home and mileage simpler to claim.
If you would like us to check you are claiming everything you can, book a call or contact us.