Sole Trader Expenses
On this page
The golden HMRC rule – “Wholly and exclusively” →
Office costs and day-to-day running expenses →
Travel costs (but not everyday commuting) →
Vehicle expenses – two ways to claim →
Food and meals (subsistence) →
Tools, equipment and capital items →
Stock, materials and goods for resale →
Professional fees and subscriptions →
Client entertaining and gifts →
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What Can You Claim?
If you are a sole trader, you are allowed to deduct certain business costs from your income before calculating your tax bill.
These are known as allowable business expenses.
Claiming the correct expenses can significantly reduce your tax bill, but it is important to only claim costs that HMRC considers acceptable. Claiming too much – or the wrong type of expense – is one of the most common reasons sole traders face HMRC enquiries.
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This guide explains:
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What sole traders can usually claim
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What is not allowed
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Common grey areas where care is needed
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Karia Accountants work with sole traders across the UK to ensure expenses are maximised correctly and remain fully HMRC-compliant.
The golden HMRC rule – “Wholly and exclusively”
HMRC’s key rule is simple:
You can only claim expenses that are wholly and exclusively for business purposes.
If an expense has both a business and personal element, you can usually only claim the business portion. If the personal element is significant and cannot be separated, the cost may not be allowable at all.
Office costs and day-to-day running expenses
These are the everyday costs of running your business.
What you can usually claim
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Stationery, printer ink, paper
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Postage and courier costs
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Business software and subscriptions
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Business phone calls and data
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Cloud accounting software (Xero, QuickBooks, etc.)
What you usually cannot claim
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Personal phone contracts with no business split
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Home broadband claimed in full where there is heavy personal use
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Personal gadgets not genuinely used for work
Tip: If you use your phone or internet for both work and personal use, you should claim a reasonable business percentage, not 100%.
Travel costs (but not everyday commuting)
Travel expenses are only allowable when you are travelling for business purposes.
Allowable travel examples
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Visiting a client or customer
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Travelling to a temporary work location
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Attending business meetings or training
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Parking fees and tolls on business trips
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Train, bus, taxi or air fares for work
Not allowable
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Travel between home and a permanent place of work
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School runs or personal errands
Travel where the main purpose is personal (for example, combining a holiday with a small amount of work)
Vehicle expenses – two ways to claim
If you use your car or van for work, HMRC allows two methods. You must choose one and stick with it.
Option 1: Simplified mileage method (most common)
HMRC mileage rates:
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45p per mile for the first 10,000 business miles
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25p per mile thereafter
This rate covers fuel, servicing, insurance and wear and tear.
You must keep a mileage log showing:
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Date
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Where you travelled
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Purpose of the trip
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Number of miles
Option 2: Actual vehicle costs
You can instead claim:
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Fuel
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Insurance
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Repairs and servicing
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MOT
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Road tax
But only the business proportion.
What you cannot do
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Claim both mileage and fuel costs
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Claim personal journeys
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Switch methods for the same vehicle without restrictions
Karia Accountants regularly advise clients on which method gives the best tax outcome.
Food and meals (subsistence)
This is one of the most misunderstood areas.
When meals may be allowable
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You are travelling for business outside your normal working pattern
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The journey itself is allowable
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The cost is reasonable
When meals are not allowable
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Your everyday lunch or coffee
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Meals bought near your usual place of work
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Food costs that are essentially personal living expenses
In most cases, normal day-to-day meals are not tax deductible.
Working from home expenses
If you run your business from home, you can usually claim a portion of household costs.
Option 1: HMRC simplified home-working rate
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£10 per month (25–50 hours)
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£18 per month (51–100 hours)
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£26 per month (101+ hours)
This is simple and requires minimal records.
Option 2: Actual household costs
You may claim a reasonable portion of:
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Electricity and gas
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Council tax
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Rent or mortgage interest
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Home insurance
This must be fair and justifiable, based on:
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Number of rooms
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Time used for business
Not allowable
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Capital improvements to your home
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Claiming 100% of household bills
Tools, equipment and capital items
Items that last more than a year are usually treated as capital assets.
Common examples
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Tools
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Laptops and computers
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Machinery
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Office furniture
These are usually claimed via capital allowances, often allowing 100% tax relief in the year of purchase.
Not allowable
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Claiming personal equipment in full
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Treating expensive assets as everyday expenses
Stock, materials and goods for resale
If you buy items to sell to customers or materials to complete jobs, these are normally allowable.
Allowable
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Stock for resale
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Raw materials
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Packaging and delivery materials
Not allowable
Items taken for personal use (unless adjusted)
Repairs and maintenance
Allowable
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Repairs that keep something in working order
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Replacing like-for-like parts
Not allowable as expenses
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Improvements that make something better than new
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Major upgrades (often treated as capital items)
Professional fees and subscriptions
Allowable
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Accountancy fees
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Bookkeeping services
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Business legal advice
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Trade-related professional subscriptions
Not allowable
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Personal legal fees
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Non-business memberships
Karia Accountants’ fees are fully allowable where they relate to your business or tax return.
Insurance and banking costs
Allowable
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Public liability insurance
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Professional indemnity insurance
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Business bank charges
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Interest on business loans
Not allowable
Personal insurance policies
Clothing and uniform
HMRC is strict in this area.
Allowable
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Protective clothing (PPE)
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Branded uniforms required for work
Not allowable
Everyday clothing (suits, shoes, smartwear), even if worn for work
Client entertaining and gifts
Not allowable
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Meals, drinks or events for clients
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Hospitality or entertainment costs
Possible exceptions
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Staff entertaining (within limits)
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Certain low-value promotional items
Why accurate expense claims matter
Claiming the right expenses can:
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Reduce your tax bill legally
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Avoid HMRC penalties
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Give you peace of mind
Claiming incorrectly can:
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Trigger HMRC enquiries
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Result in tax, interest and penalties
How Karia Accountants can help sole traders
Karia Accountants support sole traders with:
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Expense reviews and tax planning
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Bookkeeping and cloud accounting
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Self Assessment tax returns
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HMRC enquiry support
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We ensure your expenses are maximised, justified and compliant.
