If you are self-employed, you can claim any cost incurred wholly and exclusively for the business. The main categories are office costs, travel, stock, staff, premises, financial costs, marketing, professional fees and work-related training. For 2026/27, the HMRC mileage flat rate is 55p a mile for the first 10,000 business miles, and the use-of-home flat rate is £10 to £26 a month. Equipment is covered by an Annual Investment Allowance of up to £1 million. The alternative is the £1,000 trading allowance, but if you use it you cannot claim any expenses at all.
The test: wholly and exclusively for the business
Every claim starts with one question: was the cost incurred for the business? If something is used both privately and for work, you can claim only the business share. A phone bill with £70 of business calls out of £200 gives a £70 claim. Money you take out of the business for yourself is drawings, not an expense.
Since 2024/25, the cash basis has been the default for sole traders and partnerships without corporate partners. You record income when you receive it and expenses when you pay them, and most equipment purchases are simply claimed as expenses. If you opt for traditional (accruals) accounting, equipment goes through capital allowances instead. Limited companies are not self-employed and follow corporation tax rules.
What you can claim
HMRC's guidance on self-employed expenses groups allowable costs as follows:
- Office costs. Stationery, postage, printing, phone and internet bills (business share), and software used for less than two years or paid for by licence renewal;
- Premises. Rent, business rates, water rates, utilities, insurance, security and repairs to business premises;
- Travel. Fuel, insurance, repairs, servicing, vehicle tax, breakdown cover, parking, public transport, taxis, hotels and meals on overnight business trips;
- Clothing. Protective clothing, uniforms, specialist clothing and costumes, but not everyday clothes, even if you only wear them for work;
- Staff. Salaries, bonuses, pensions, benefits, subcontractors, agency fees and employer's National Insurance;
- Stock and materials. Goods for resale, raw materials and direct production costs;
- Financial costs. Bank charges, interest on business loans, hire purchase interest, leasing payments and business insurance such as public liability and professional indemnity;
- Professional fees. Accountants, solicitors, surveyors and architects used for business reasons;
- Marketing. Advertising, mailshots and website costs;
- Subscriptions. Trade and professional journals and relevant professional body membership;
- Training. Courses that maintain or update skills you use in the existing business.
Flat rates: mileage and working from home
Simplified expenses let sole traders replace actual costs with HMRC flat rates. They are optional, so compare both methods.
| Item | Flat rate (2026/27) |
|---|---|
| Cars and vans, first 10,000 business miles | 55p a mile (45p before 6 April 2026) |
| Cars and vans, each mile over 10,000 | 25p a mile |
| Motorcycles | 24p a mile |
| Home working, 25 to 50 hours a month | £10 a month |
| Home working, 51 to 100 hours a month | £18 a month |
| Home working, 101 hours or more a month | £26 a month |
The mileage rate replaces all running costs and capital allowances for that vehicle. You cannot use it for a vehicle you have already claimed capital allowances on, and once you start, you must keep using it for that vehicle. Parking and other travel such as trains are claimed on top. The home rate does not include phone or internet, which you claim separately. For heavy home use, an actual-cost split, by rooms used or time spent, often produces more, including a share of heating, electricity, council tax, and mortgage interest or rent. Our HMRC mileage rates guide and working from home allowance guide cover both rates in detail.
Equipment and vehicles
On the cash basis, equipment you keep and use in the business, such as computers, tools and machinery, is claimed as an ordinary expense when paid for. Cars are the exception: they go through capital allowances, unless you use the mileage flat rate instead.
Under traditional accounting, equipment goes through capital allowances. The Annual Investment Allowance gives 100% relief on up to £1 million a year of qualifying plant and machinery. Anything not covered goes into the main pool, which now attracts a writing-down allowance of 14% a year, down from 18% before April 2026.
What you cannot claim
- Commuting. Travel between home and work, and any non-business driving;
- Fines and penalties. Including parking fines and penalties for breaking the law;
- Everyday clothing. Suits, shirts, dresses and ordinary shoes;
- Client entertaining. Hospitality, tickets and meals for clients, suppliers or customers. Staff events where employees are the main attendees are allowable;
- Gifts above £50. Promotional gifts that carry your business name or logo are allowable only if the total cost of gifts to each recipient is £50 or less in the tax year. Food, drink, tobacco and vouchers are excluded entirely;
- Loan repayments. The capital part is not an expense, although interest is;
- Personal costs. Gym membership, political donations, charitable donations (sponsorship may qualify), and childcare or domestic help;
- Your own tax return. HMRC's guidance excludes the cost of preparing and submitting your Self Assessment return, even though accountancy for the business itself is allowable;
- Training for a new venture. Courses to start a new business or move into an unrelated field.
Expenses or the £1,000 trading allowance?
The trading allowance lets you deduct a flat £1,000 from gross trading income instead of your actual costs. If your expenses are more than £1,000, claim them instead. The allowance replaces all expenses and capital allowances, so you cannot use both. It mainly suits small side businesses with low costs.
You do not send receipts with your return, but you must keep records that support every figure in case HMRC asks for them. From April 2026, sole traders and landlords with qualifying income over £50,000 must keep those records digitally under Making Tax Digital; see our guide to the new self-employed tax rules.
Acumon's accountants for sole traders prepare accounts and returns that claim everything the rules allow. Our Self Assessment service can review past returns for expenses that were missed.