Sole trader allowable expenses: a plain-English checklist
On a self-assessment return you pay tax on your profit, which is your income minus allowable expenses. Knowing what counts saves tax and avoids trouble. This is general information, not tax advice.
Last checked October 2026. General information, not tax or accounting advice.
The basic test
HMRC allows costs that are incurred wholly and exclusively for your business. If something is partly personal, you can usually claim only the business part. Capital items such as a computer or van are handled differently from day-to-day costs, so check the rules for those.
Common categories
- Office costs: stationery, phone and internet used for the business, software subscriptions.
- Travel: fuel, parking, train and bus fares for business journeys. Normal commuting is not allowed.
- Stock and materials you buy to resell or use in your work.
- Staff or subcontractor costs.
- Premises costs, such as rent and utilities, if you use business premises.
- Advertising and marketing, such as a website or ads.
- Professional fees, such as an accountant.
- Bank and finance charges on a business account.
The £1,000 trading allowance
If your trading income is £1,000 or less in a tax year, you generally do not need to report it. If it is more, you can choose between deducting your actual expenses and deducting a flat £1,000 allowance instead. You cannot do both for the same income, so work out which gives the lower profit.
Make it easier to sort
Most of the work is sorting a year of bank transactions into income and expense categories. Keep business and personal spending in separate accounts if you can, and keep receipts for anything you claim.
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