What Expenses Can Sole Traders Claim in the UK? A 2025 Guide

If you’re a sole trader in the UK, one of the best ways to reduce your tax bill is by claiming allowable business expenses. But many self-employed people either don’t claim enough and end up paying more tax than they need to, or claim too much and risk problems with HMRC.

This guide explains what you can and can’t claim as a sole trader in the 2025/26 tax year.

What Are Allowable Expenses?

Allowable expenses are the costs you incur wholly and exclusively for running your business. They are deducted from your income before calculating your taxable profit.

Put simply: Income – Expenses = Taxable Profit

Claiming correctly ensures you only pay tax on the profit you actually make.

Common Sole Trader Expenses

Here are some of the most frequent costs that sole traders can claim:

1. Office and Working From Home Costs

• Rent for business premises

• Business rates and utilities

• Home office expenses (a proportion of rent, mortgage interest, utilities, broadband)

• Office supplies such as stationery, printer ink, and postage

2. Travel and Vehicle Costs

• Fuel, insurance, MOT, and servicing (business use only)

• Public transport, parking, and toll fees

• Business trips (excluding ordinary commuting)

• Alternatively, use HMRC’s simplified mileage rates (currently 45p per mile for the first 10,000 miles, then 25p per mile)

3. Marketing and Advertising

• Website hosting and domain costs

• Online ads and print advertising

• Business cards, flyers, and networking events

4. Phone and Internet

• Mobile phone contracts (business proportion only)

• Internet and landline bills if used for work

5. Professional Fees and Subscriptions

• Accountancy and bookkeeping fees

• Business insurance (e.g. professional indemnity, public liability)

• Trade body memberships and professional subscriptions

6. Training and Development

• Training courses that update or improve existing skills (not brand-new skills unrelated to your business)

• Relevant books, journals, or online resources

7. Equipment and Tools

• Computers, software, and apps

• Machinery, tools, and protective clothing

• Small capital items that are necessary for your trade

8. Staff Costs

• Salaries and wages for employees

• Subcontractor payments

• Employer pension contributions

Expenses You Cannot Claim

It’s equally important to know what doesn’t count as an allowable expense. These include:

• Personal drawings (the money you take out of the business for yourself)

• Client entertainment (e.g. taking clients out for dinner)

• Fines, penalties, or speeding tickets

• Everyday clothing (unless it’s protective or branded for work)

Simplified Expenses

HMRC allows sole traders to use flat-rate ‘simplified expenses’ for some costs, such as:

• Business mileage

• Working from home (flat rate depending on hours worked at home)

• Living at your business premises

This can make record-keeping easier, especially for smaller businesses.

Final Thoughts

Claiming the right expenses ensures you’re not paying more tax than necessary and keeps you compliant with HMRC. The rules can be nuanced, particularly for home working, vehicles, or mixed personal and business use, so it’s always worth double-checking with an accountant.

At Highway 61, we help sole traders across the UK keep their books accurate, compliant, and tax-efficient. Get in touch today to find out more.