Self-Employed Allowable Expenses: Complete UK Checklist
A practical category-by-category guide to allowable expenses for UK sole traders, including mixed-use costs, simplified expenses, records, and common exclusions.
Last reviewed: 11 August 2026 · Editorial policy
Download the allowable-expenses checklist
A reusable CSV checklist for reviewing expense categories and recording the evidence you hold.
How allowable expenses affect your tax
A sole trader is taxed on business profit rather than total sales. Broadly, profit is business income minus allowable business expenses. If turnover is £40,000 and allowable expenses are £10,000, the starting profit figure is £30,000 before any other tax adjustments.
An expense does not usually reduce tax by its full cost. It reduces the profit on which Income Tax and, where applicable, Class 4 National Insurance are calculated. The actual saving depends on your total income, tax band, region, and circumstances.
Expense categories to review
The business purpose matters more than the label on the receipt. The table gives common examples, but it is not a guarantee that every cost in a category is allowable.
| Category | Common business examples | Watch for |
|---|---|---|
| Office and software | Stationery, postage, accounting software, cloud storage and business phone use | Remove personal use and distinguish equipment from day-to-day supplies |
| Travel | Business rail fares, parking, hotels and eligible vehicle costs | Ordinary commuting and private journeys are normally excluded |
| Premises | Rent, business rates, utilities, security and repairs for business premises | Home costs need a reasonable business-use calculation |
| Staff and subcontractors | Wages, employer costs, agency fees and genuine subcontractor invoices | Payroll, employment-status and CIS rules may also apply |
| Stock and materials | Goods for resale, raw materials, packaging and direct production costs | Keep year-end stock records if using traditional accounting |
| Marketing | Website costs, online advertising, print, sponsorship with a business purpose | Gifts and hospitality have separate restrictions |
| Professional and financial | Business insurance, bank charges and qualifying professional fees | Fines, loan principal and personal tax-return preparation are not normally allowable |
| Training | Courses that update or improve skills used in the existing business | Training for an entirely new trade may not be a revenue expense |
Split mixed business and personal costs
Where a cost has both business and private use, claim only the identifiable business portion. A phone bill, broadband contract, vehicle, or room at home may all need a fair apportionment supported by records.
Use a method you can explain consistently. For home costs that might mean rooms and time used; for a vehicle it might mean a mileage log; for a phone it could be an itemised bill or a reasonable usage review. Keep the calculation with the original evidence.
- Record the total cost and the percentage treated as business use.
- Note why the allocation method is reasonable for your circumstances.
- Revisit the percentage when working patterns or usage change materially.
Actual costs, simplified expenses, or the trading allowance
Eligible sole traders and qualifying partnerships can use simplified flat rates for vehicle use, working from home, and living at business premises. These rates reduce calculation work, but they are not automatically more valuable than actual costs.
The separate trading allowance can deduct up to £1,000 from qualifying gross trading income. If you use the trading allowance, you cannot also deduct actual business expenses or capital allowances for that income. Compare both approaches before choosing.
| Method | What it does | Usually worth comparing when |
|---|---|---|
| Actual expenses | Claims the allowable business share of evidenced costs | Your genuine costs are substantial or do not fit simplified categories |
| Simplified expenses | Uses HMRC flat rates for certain vehicles, home working, or business-premises living costs | You want simpler records and meet the eligibility rules |
| Trading allowance | Deducts up to £1,000 instead of actual expenses for qualifying trading income | You have low costs or a small side income |
Costs that commonly cause mistakes
Personal drawings are not an expense. Nor is every payment from a business bank account automatically deductible. Common problem areas include everyday clothing, client entertainment, fines, loan repayments, capital purchases, and costs with an unrecorded private element.
Equipment and other longer-life assets may be treated differently depending on whether you use cash basis or traditional accounting. Cars have specific rules. If the treatment is uncertain or the amount is material, check before submitting the return.
- Ordinary clothing, even if you only wear it for work
- The private part of phone, travel, vehicle, or home costs
- Your own Self Assessment preparation fee
- Fines and penalties for breaking the law
- The capital element of loan repayments
Build an audit-ready expense record
For each expense, retain evidence showing the supplier, date, amount, VAT where relevant, what was purchased, and how it relates to the business. Bank feeds are helpful, but a bank line alone may not show enough detail to establish the business purpose.
Self-employed records generally need to be kept for at least five years after the 31 January submission deadline for the relevant tax year. Making Tax Digital may also require qualifying sole traders to create and maintain digital income and expense records in compatible software.
- Reconcile bank and card accounts regularly rather than at year end.
- Attach digital copies of receipts to transactions where possible.
- Separate personal spending and record mixed-use adjustments clearly.
- Review unusual, high-value, overseas, or capital items before filing.
Frequently asked questions
Can I claim an expense paid from my personal account?+
Potentially, if it is an allowable business expense and you retain evidence. Record it in the business books and show clearly that you paid it personally.
Can I claim both the £1,000 trading allowance and expenses?+
No. For the same qualifying trading income, the trading allowance is used instead of actual expenses and capital allowances. Compare the two methods before choosing.
Do I need the paper receipt?+
Digital copies can be useful evidence, but you must retain adequate supporting records. Make sure the copy is readable and linked to the date, supplier, amount, and business purpose.