Allowable Expenses for Sole Traders
Introduction
Claiming allowable expenses is one of the simplest ways to reduce your tax bill as a sole trader — but it’s also one of the biggest sources of confusion.
In this guide, we explain what HMRC allows, what counts as a genuine business cost, which expenses are commonly missed, and how to handle items that are both business and personal.
Understanding these rules helps you claim confidently and avoid paying more tax than necessary.
What Counts as an Allowable Expense?
Allowable expenses are business costs that HMRC lets you deduct from your income before calculating tax.
HMRC’s “wholly and exclusively” rule
To claim an expense, it must be:
- wholly for business purposes
- exclusively for business purposes
This means:
- If a cost is entirely business-related → you can claim it in full.
- If it has a mix of business and personal use → you can claim the business portion only.
- If it is mainly personal with a minor business use → you cannot claim it.
Examples of fully claimable expenses include tools, business travel, or advertising.
Examples of mixed-use expenses include mobile phone bills or home office costs.
Common Allowable Expenses
Travel and transport
You can claim travel that is wholly and exclusively for work, such as:
- Driving to client sites
- Public transport for business meetings
- Parking fees
- Mileage (using HMRC’s approved mileage rates)
You cannot claim commuting between your home and your regular place of work.
Tools, equipment and materials
This includes:
- Tools and supplies used in your trade
- Office equipment
- Protective clothing needed for your work
- Software used for business purposes
Home office costs
If you work from home regularly, you can claim a portion of:
- Rent or mortgage interest
- Utilities (electricity, heating)
- Internet
- Council tax
- Cleaning
HMRC offers two options:
- Simplified expenses (flat rates based on hours worked at home)
- Actual apportionment (splitting costs fairly based on usage)
Phone and internet
You can claim:
- A proportion of your mobile phone bill
- A proportion of your broadband bill
Only the business portion is allowable.
Marketing and subscriptions
Including:
- Website hosting
- Ads and promotions
- Professional memberships
- Online tools and subscriptions used for work
Training and development
Training counts if it:
- improves skills you already use in your business
- keeps your professional knowledge up to date
Courses for a new trade or a different career are not allowable.
Expenses You Cannot Claim
Personal expenses
If something is mainly personal — even if it has some incidental benefit to your business — HMRC will not allow it.
For example:
- Everyday clothing (not protective gear)
- Non-business travel
- Meals unless part of business travel
Clothing (with exceptions)
Only protective clothing or uniforms used solely for work can be claimed.
Normal clothing — even if worn for work — is not an allowable expense.
Fines and penalties
HMRC does not allow you to claim:
- Parking fines
- Penalties
- Late filing charges
These are always considered personal liabilities.
Part Business / Part Personal Costs
Apportionment rules
Many expenses are genuinely split between business and personal use.
For example:
- Mobile phone bills
- Internet
- Home office
- A vehicle used for both work and personal trips
HMRC allows you to claim the fair, business-related portion only.
Practical examples
- If 60% of your phone usage is work-related → you can claim 60% of your bill.
- If you use one room at home solely for work 40% of the time → you can claim 40% of the room’s share of household bills.
HMRC does not require perfect precision — only a reasonable and consistent method.
Record Keeping for Expenses
What HMRC expects
Keep evidence that supports your claims, such as:
- Receipts
- Invoices
- Bank statements
- Mileage logs
- Notes on how you calculated apportionment
How long to keep records
HMRC requires you to keep records for at least five years after the 31 January filing deadline.
For example:
For the 2023–24 tax return due 31 January 2025, keep records until at least 31 January 2030.
How QTax Helps
QTax supports you by:
- Explaining which expenses are commonly allowable
- Helping you identify potential deductions
- Highlighting anything that looks inconsistent before filing
- Ensuring your return reflects HMRC rules and MTD requirements
You stay in charge of the figures — QTax simply helps you file confidently.
FAQs
Can I claim lunch as an expense?
You can only claim meals when travelling for work or staying away overnight. Everyday meals are not allowable.
Can I claim clothing?
Only protective gear or uniforms — not normal clothes.
Do I need to send receipts to HMRC?
No, but you must keep them in case HMRC requests evidence later.
Conclusion
Allowable expenses are a valuable way for sole traders to reduce their tax bill — as long as you follow HMRC’s rules on what can and can’t be claimed.
Once you understand the categories, claiming the right expenses becomes straightforward.
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