Allowable expenses: what self-employed people can claim
Allowable expenses are the business costs you deduct from your income to work out your taxable profit. Claim the right ones and you pay tax on your real profit, not your turnover. This guide sets out the GOV.UK categories, the costs that catch people out, how to handle things you use privately too, and the flat-rate shortcuts sole traders can choose.
Not tax advice: this guide explains HMRC's published rules for sole traders and partners. Limited companies follow different rules. If you're unsure whether a cost counts, GOV.UK suggests contacting HMRC, or you can ask an accountant.
How allowable expenses work
GOV.UK says you can deduct running costs to work out your taxable profit before paying Income Tax, "as long as they're allowable expenses". Here's a simple illustration with made-up figures:
| Line | Amount |
|---|---|
| Income from customers in the tax year | £32,000 |
| Minus allowable expenses | £6,500 |
| Taxable profit | £25,500 |
Income Tax and National Insurance are worked out on the £25,500, not the £32,000. That's why it pays to keep good records of every cost. Our guide to bookkeeping for small business covers how to capture receipts as you go.
One rule sits above everything else. GOV.UK says allowable expenses don't include money you take from the business for personal use. Paying yourself from a sole trader business isn't an expense; it comes out of profit.
Allowable expenses: the GOV.UK categories
GOV.UK groups allowable expenses for the self-employed into nine headings. The examples below come from GOV.UK's own pages.
| Category | Examples GOV.UK gives |
|---|---|
| Office, property and equipment | Stationery, phone and internet bills, postage, printer ink, rent and rates for business premises, utility bills, repairs |
| Travel | Fuel, parking, vehicle insurance and repairs, train, bus, air and taxi fares, hotel rooms and meals on overnight business trips |
| Clothing | Uniforms, protective gear such as safety boots or hard hats, costumes for performers |
| Staff | Employee pay and bonuses, pension contributions, agency fees, subcontractors, employer's National Insurance |
| Goods for resale | Stock, raw materials, direct costs of producing goods |
| Legal and financial | Business insurance, bank, overdraft and credit card charges, interest on business loans, accountants' fees for business reasons |
| Marketing | Advertising, mailshots, website costs, free samples |
| Subscriptions | Trade or professional journals and memberships |
| Training | Courses that help you improve skills you already use in the business |
Bank charges are worth a note on a banking site. GOV.UK lists bank, overdraft and credit card charges as allowable expenses. So the monthly fee on a paid business account plan counts as a financial cost. If you're weighing up fees, you can compare business bank accounts side by side.
Costs you usually can't claim
Most disputes about allowable expenses come from a short list of costs that look like business spending but aren't. Based on GOV.UK's guidance, these usually don't count:
Everyday clothes
Suits, shirts, dresses or ordinary shoes, even if you only wear them for work.
Commuting
Travel between home and your regular place of work, and any non-business travel.
Fines
Parking and speeding fines, and other penalties for breaking the law.
Client entertaining
Meals, drinks and event tickets for clients or suppliers. Staff events, such as an annual staff dinner, can count.
Loan repayments
The interest on a business loan counts, but repaying the money you borrowed doesn't.
Private goods
Anything you buy for personal use, plus domestic help such as nannies.
Here's how the categories play out for three different (made-up) sole traders:
Mobile dog groomer
Clippers, shampoo and towels used on the job, van fuel between clients, public liability insurance and her business account fees. Her weekly supermarket shop isn't a business cost, even if she buys treats for the dogs in the same trip.
Freelance designer
Software subscriptions, a share of home broadband, a trade body membership and a short course in a tool he already uses. The new suit for a client pitch doesn't count.
Market stall trader
Stock bought to sell, pitch fees, packaging and the van's business miles. A parking fine picked up while unloading can't be claimed.
Branded giveaways sit in between. GOV.UK says you can claim promotional items like diaries or keyrings with your logo, up to £50 per recipient per tax year, but not food, drink or tobacco.
Allowable expenses for things you use privately too
Plenty of costs are part business, part personal: your phone, your car, your home broadband. GOV.UK's rule is simple. You can only claim the business share.
GOV.UK's own example: if your phone bill is £200 and £130 of it is personal calls, you can claim £70. Keep a note of how you worked out the split, such as an itemised bill or a mileage log, so you can explain it if HMRC asks.
Keeping business and personal spending apart makes this much easier. If most of your business costs go through one account, separating allowable expenses from private spending takes minutes, not hours. Our guide on why you might want a separate business bank account explains more.
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Simplified expenses: flat rates instead of receipts
GOV.UK's simplified expenses let sole traders, and partnerships with no company partners, use flat rates for three types of cost instead of working out the actual figure. Limited companies can't use them. Every other allowable expense still uses actual costs.
Vehicles. For cars, vans and other goods vehicles, and motorcycles, you claim a rate per business mile.
| Vehicle | Rate per business mile |
|---|---|
| Cars and goods vehicles, first 10,000 miles | 55p (was 45p before 6 April 2026) |
| Cars and goods vehicles, after 10,000 miles | 25p |
| Motorcycles | 24p |
You can't use the flat rate for a vehicle you've already claimed capital allowances on, and once you start using it for a vehicle you must keep using it for that vehicle. Parking and other travel, like train fares, can be claimed on top.
Working from home. If you work 25 hours or more a month from home, you can claim a flat monthly amount instead of splitting your bills:
| Hours of business use a month | Flat rate a month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 or more | £26 |
Living at your business premises. There's a separate flat rate for people like B&B owners who live where they work. See GOV.UK for the details.
Equipment and capital allowances
Bigger items you keep, like a laptop, tools or a van, are treated differently depending on your accounting method.
Cash basis
The default for sole traders from 2024 to 2025. GOV.UK says equipment such as computers or printers is claimed as allowable expenses. Cars are the exception: they go through capital allowances unless you use simplified mileage.
Traditional accounting
Equipment you keep is usually claimed through capital allowances instead. Bad debts can only be claimed under this method.
Capital allowances have their own rules, so this is a good point to check with an accountant if you're buying something expensive.
Allowable expenses or the £1,000 trading allowance?
GOV.UK says you can't claim allowable expenses if you use the £1,000 tax-free trading allowance. You choose one or the other. If your costs are low, the allowance may be simpler. If your costs are higher than £1,000, claiming actual allowable expenses means a lower taxable profit. Our side hustle tax guide covers the trading allowance in more depth.
Whichever route you take, claiming allowable expenses properly also changes how much tax to put aside. Our guide on how much to save for tax shows how profit turns into a tax bill.
- keep a receipt or invoice for every cost you claim
- note the business share of anything you also use privately
- decide between actual costs and flat rates for your vehicle
- log your monthly hours if you claim working from home
- check unusual allowable expenses with HMRC or an accountant
Allowable expenses: FAQs
What are allowable expenses?
Business running costs you can deduct from your income to work out taxable profit, as set out on GOV.UK's expenses if you're self-employed pages.
Can I claim my business bank account fees?
GOV.UK lists bank, overdraft and credit card charges among allowable expenses for the self-employed.
Can I claim lunch while working?
Everyday meals usually aren't allowable expenses. GOV.UK lists meals on overnight business trips as allowable travel costs.
Can I claim for clothes I wear to work?
Only uniforms, protective gear and costumes. Everyday clothing doesn't count, even if you only wear it for work.
Do limited companies use the same allowable expenses rules?
No. This guide covers sole traders and partners. Companies follow Corporation Tax rules, so ask an accountant.
Sources
- GOV.UK: expenses if you're self-employed, including the office, travel, clothing, staff, resale, legal and financial, and marketing pages
- GOV.UK: simplified expenses if you're self-employed, including the vehicles and working from home pages
- All sources checked 25 October 2026.