SELF-EMPLOYED GUIDE

Self-employed allowable expenses: what you can claim.

If you work for yourself, many of the costs of running your business reduce the profit you pay tax on. This guide sets out which costs count, which do not, how to handle things you also use privately, and what records to keep.

Figures for the 2026/27 tax year · Last reviewed 21/10/2026

How allowable expenses cut your tax bill

You are self-employed if you are a sole trader or an individual partner in a business partnership. Income Tax is charged on your taxable profit, not on everything you take in.

Taxable profit is your turnover minus your allowable expenses. HMRC's own example: turnover of £40,000 and allowable expenses of £10,000 leave a taxable profit of £30,000.

Two points to hold on to from the start:

Business costs only. Money you take out of the business for yourself is not an expense.
Limited companies follow other rules. If you run a limited company you are not self-employed, even as the only owner and worker. The company claims its costs against Corporation Tax instead.

The trading allowance or real expenses: pick one

Every individual can use a £1,000 tax-free trading allowance each tax year. If your trading income is £1,000 or less, you may not need to tell HMRC about it, though there are cases where you still must register for Self Assessment.

If your trading income is more than £1,000, you choose. Either deduct the £1,000 allowance, or deduct your actual allowable expenses. You cannot do both. If you use the allowance, you cannot claim any expenses or capital allowances on top.

The choice is mainly arithmetic. If your real business costs for the year are more than £1,000, claiming them will usually give a lower profit.

Day-to-day costs you can usually claim

HMRC groups allowable expenses into broad areas. The lists below cover the common ones.

Office, phone and premises

Phone, mobile and internet bills, postage, stationery, printing and printer ink
Software you use for less than 2 years, or software you pay for on a regular renewing licence
Rent for business premises, business and water rates, utility bills, property insurance and security
Repairs and maintenance of business premises and equipment

Travel and vehicles

Vehicle insurance, repairs and servicing, fuel, parking, hire charges, vehicle tax and breakdown cover
Train, bus, tram, air and taxi fares for business journeys
Hotel rooms and meals on overnight business trips

Stock, staff and services

Goods you buy to sell on, raw materials and direct production costs
Staff salaries, bonuses, pensions, benefits, employer's National Insurance and agency fees
Subcontractors you pay to do work for the business
Accountants, solicitors, surveyors and architects hired for business reasons

Finance, marketing and learning

Bank, overdraft and credit card charges, interest on business loans, hire purchase interest and leasing payments
Business insurance, such as public liability and professional indemnity
Advertising, mailshots and website costs
Trade or professional journals and memberships linked to your work
Training that keeps your current skills up to date or supports the business you already run

Costs HMRC will not accept

Some costs feel like business costs but are blocked. These come up again and again:

Ordinary commuting. Travel between home and your regular place of work.
Fines and penalties. Parking fines and other penalty charges, and fines for breaking the law.
Entertaining. Hospitality for clients, suppliers or customers, including a working lunch. A staff event where employees are the main guests is different.
Everyday clothes. Suits, shirts, dresses and ordinary shoes, even if you only wear them for work.
Loan repayments. The interest can count, but repaying the money borrowed cannot.
Your tax return. The cost of preparing and submitting your Self Assessment return.
Personal extras. Gym membership, payments to political parties, charity donations, and carers or domestic help such as nannies.
Training for a new venture. Courses to start a new business or move into an unrelated field.

Clothing that does count. You can claim protective kit such as safety boots or hard hats, overalls or aprons used only for work, uniforms and specialist clothing that is not everyday wear, and costumes for performing or advertising.

Giveaways. Free samples of things you sell can be claimed. For branded items you do not sell, such as diaries or keyrings, the limit is £50 per person per tax year. Food, drink and tobacco do not qualify.

Things you use for business and personal life

Many sole traders use one phone, one car and one home for both. You can only claim the business share. If you run a limited company instead, see allowable expenses for limited companies.

HMRC's example is a £200 phone bill where £70 of the calls were for business. The claim is £70.

The key is a fair, consistent method that you can explain. Write it down once and apply it every year. A rough guess made in January is much harder to defend.

Working from home

If you work from home you can claim a share of heating, electricity, Council Tax, mortgage interest or rent, and internet and phone use. You need a reasonable way to split the costs, such as the number of rooms used for work or the time spent working there.

Instead of splitting bills, you can use a flat monthly rate if you work at home for 25 hours or more a month:

25 to 50 hours a month: £10
51 to 100 hours a month: £18
101 hours or more a month: £26

The flat rate does not include phone or internet. You claim the business share of those bills separately.

Cars, vans and motorbikes

You can claim the business share of actual running costs. Or, as a sole trader or partnership with no company partners, you can use a flat rate per business mile instead. GOV.UK gives these rates for the 2026/27 tax year:

Cars and goods vehicles, first 10,000 business miles: 55p a mile
Cars and goods vehicles, after 10,000 miles: 25p a mile
Motorcycles: 24p a mile

The mileage rate replaces the costs of buying and running the vehicle, such as fuel, insurance and repairs. Parking and other travel, like train fares, can still be claimed on top. You cannot use the flat rate for a vehicle you have already claimed capital allowances on or included as an expense. Once you use it for a vehicle, you must keep using it for as long as that vehicle is used in the business.

Equipment and bigger purchases

How you claim for equipment depends on your accounting method. Cash basis is the default from the 2024/25 tax year. You record income and costs when money actually comes in or goes out. You can opt out and use traditional accounting, where you record items when you invoice or are billed.

Cash basis: equipment you keep, such as a computer or printer, is claimed as an allowable expense. A car is the exception. It goes through capital allowances, unless you use the mileage flat rate for it.
Traditional accounting: equipment, machinery and vehicles are claimed through capital allowances rather than as expenses.

Under traditional accounting you can also claim for bad debts. That means sales you included in turnover and are sure you will never be paid for. Under cash basis there is nothing to write off, because unpaid sales were never counted as income.

A worked example

This example is made up to show the maths. Imagine a self-employed mobile dog groomer using cash basis, with £38,000 of turnover in the year.

They spend £2,400 on shampoo and grooming supplies and £360 on business insurance. Their phone costs £600 a year and 40% of its use is for work, so they claim £240. They drive 6,000 business miles in their van and use the 55p flat rate, giving £3,300. They do admin at home for about 60 hours a month, so the flat rate is £18 a month, or £216 for the year.

They also bought a client lunch for £80 and work trousers for £45. Neither is allowable.

Allowable expenses: £2,400 + £360 + £240 + £3,300 + £216 = £6,516. Taxable profit: £38,000 − £6,516 = £31,484.

Records you need to keep

You do not send receipts with your tax return. You record your total expenses on your Self Assessment return and keep the proof in case HMRC asks for it.

Keep receipts for goods and stock, bank statements, sales invoices and anything else that shows what you spent and why. Your records must be accurate and you must be able to pick out business transactions.

Keep them for at least 5 years after the 31 January filing deadline for the tax year. For a 2026/27 return due by 31 January 2028, that means keeping records until at least the end of January 2033.

Habits that stop expenses slipping through

Keep business spending on one account or card, so nothing gets lost among personal items
Save a copy of each receipt when you pay, not at year end
Note the reason for anything unusual, such as a hotel stay or a training course
Log business mileage as you go if you use the flat rate
Decide your split for phone, home and vehicle once, and apply it the same way each year

Most missed claims are not about the rules. They are about receipts and bank lines that were never matched up while the details were still fresh.