Allowable expenses when you're self-employed (UK)

Every allowable expense you record lowers the profit you pay tax on. Miss them and you pay more tax than you need to, on money you never really had.

Here’s what counts, what doesn’t, and the handful of places people reliably lose money.

Rates and rules checked against GOV.UK on 20 July 2026, for the 2026/27 tax year. Sources at the end.

The rule of thumb

An allowable expense is a cost that is wholly and exclusively for your business.

That phrase does most of the work, and it’s stricter than people expect. If a cost is purely for the business it usually counts. If it’s personal, it doesn’t. If it’s a mix, only the business share does, and you need to be able to explain how you arrived at that share.

The test isn’t whether the expense was useful to your business. It’s whether the reason you incurred it was the business.

What you can claim

GOV.UK groups allowable expenses into these categories, and they’re the same headings your tax return uses. Using them from your first purchase of the year turns filing into transcription instead of re-sorting a shoebox in January.

Category	What goes in it
Office costs	Stationery, phone bills, software and subscriptions
Travel	Fuel, parking, train and bus fares, business mileage
Clothing	Uniforms and genuine protective gear only
Staff costs	Salaries, subcontractor costs
Stock and raw materials	Things you buy to resell or make with
Financial costs	Insurance, bank charges
Premises	Heating, lighting, business rates, rent
Advertising and marketing	Ads, website costs
Training	Courses related to your existing business

What you can’t claim

Personal spending, or the personal share of a mixed cost
Client entertaining. Generally not allowable, however much business it generated
Your own wages as a sole trader. You’re taxed on profit, not on what you take out. Money you draw from the business isn’t an expense and doesn’t reduce your tax bill. This is a real first-year misunderstanding: taking £20,000 out of a business that made £30,000 profit doesn’t mean you’re taxed on £10,000. You’re taxed on £30,000.
Fines and penalties, including parking tickets, even ones incurred on a business journey
Ordinary clothes, however much the work requires you to look smart

The four that cost people the most money

Most missed deductions aren’t exotic. They’re these.

1. Mileage, at a rate that just changed

If you use your own vehicle for business, you can claim a flat rate per mile instead of working out the real running costs.

For cars and goods vehicles that’s now 55p a mile for the first 10,000 business miles in the tax year, then 25p a mile above that.

That 55p is new. It was 45p for years and rose with retrospective effect from 6 April 2026. Nearly every mileage article and template online still says 45p.

On 12,000 business miles the difference isn’t trivial:

At the current rate: (10,000 × 55p) + (2,000 × 25p) = £6,000
At the old rate: (10,000 × 45p) + (2,000 × 25p) = £5,000

That’s £1,000 more coming off your profit before tax is worked out. If you’ve already calculated a claim using 45p, it’s worth redoing.

Two rules before you rely on it. Commuting between home and a permanent workplace doesn’t count, and once you use the flat rate for a particular vehicle you keep using it for that vehicle. You can’t alternate year to year depending on which comes out better. The flat rate covers everything: fuel, insurance, servicing, repairs, road tax. You don’t claim those on top, and you don’t claim capital allowances on the vehicle either.

2. Working from home

You can claim a share of your household costs, worked out either as a genuine proportion of your actual bills, or using HMRC’s simplified flat rate based on how many hours a month you work from home.

The flat rate is easier and safe. Working out real proportions can be worth more if you use a substantial part of your home, but it takes records to defend. Check the current flat rates on GOV.UK before you pick, since the bands are set by hours worked per month.

3. Equipment, which isn’t quite an expense

Things you buy and keep (a laptop, a camera, a van, machinery) are capital rather than day-to-day running costs, and go through capital allowances instead of sitting in your expenses total.

The Annual Investment Allowance lets you claim the full cost of most plant and machinery in the year you buy it, up to £1 million a year. That ceiling is far above anything a typical sole trader spends, so in practice most equipment is fully claimable straight away. It just goes in a different box.

Cars are the main exception and are handled separately.

There’s a wrinkle worth knowing: under cash basis accounting, most equipment is simply claimed as an ordinary expense, with cars still going through capital allowances. If you’re not sure which basis you’re on, that’s worth establishing before you fill in a year’s worth of records.

4. Pre-trading expenses

You can generally claim costs you incurred before you started trading, treating them as if they happened on your first day of business. Domain names, a laptop, initial stock, professional fees, the course you took to get set up.

People routinely miss this because they weren’t “in business” yet when they spent the money. Go back through the months before you started and check.

The edge cases people get wrong

Clothing. A uniform with your logo on it counts. Protective gear counts. The smart outfit you bought specifically for client meetings does not, and this has been tested and settled in court. The reasoning is that ordinary clothing also provides warmth and decency, so it fails the “wholly and exclusively” test regardless of why you bought it.

Training. Courses that maintain or update your existing skills are allowable. A course to break into a genuinely new trade generally isn’t, because it’s treated as acquiring a new capability rather than running the current business.

Lunch. Eating is something you’d do anyway. Subsistence on a genuine business trip away from your normal pattern of work is a narrower thing than “meals while working”, and the difference matters.

Your phone. Claim the business proportion, and be able to say how you worked it out. “About half” is a defensible answer if it’s honest and consistent. Claiming 100% of a phone you also use personally is not.

Mixed journeys. If you stop at the supermarket on the way back from a client visit, only the business part of the journey is claimable.

Why this matters more than people think

Say you earn £30,000 and have £6,000 of genuine allowable expenses. You’re taxed on £24,000, not £30,000.

At the basic rate that’s 20% Income Tax plus 6% Class 4 National Insurance on that £6,000, so recording those expenses is worth about £1,560 to you. Every real expense you forget is money you overpay.

That’s the whole argument for logging things as they happen. Not tidiness. A year-old expense with no receipt and no memory attached is one you won’t claim, and one you’ll be taxed on.

Keep the evidence, not just the number

A row in a spreadsheet is a claim. A receipt is proof of it.

Keep records for at least five years after the 31 January filing deadline for that tax year. A photo is fine and often better than the paper, because thermal receipts fade to blank within a couple of years. The original is frequently the worse record.

Sedonis makes it a habit: log an expense in seconds with its category and a photo of the receipt, and see your real profit after costs as the year goes. In January you’re reading a total rather than reconstructing one. Free to start.

Next steps

Free expenses tracker · laid out in the categories above
Free mileage log · at the current 55p rate
Self-employed tax calculator · what the profit actually costs you
The self assessment guide and bookkeeping for small business

Checked against GOV.UK on 20 July 2026: expenses if you're self-employed, the increase to simplified mileage rates, Annual Investment Allowance, Income Tax rates. Rates change, usually each April, and the mileage rate changed mid-year.

General information, not tax advice. Allowable-expense rules have genuine edge cases and depend on your trade. Check GOV.UK or an accountant for anything you’re unsure about, particularly working-from-home proportions and anything with a personal element.