What counts as a business expense for sole traders? It’s one of the most common questions I get asked — and for good reason.
If you’re a sole trader or small business owner, it’s essential to understand what you can and can’t claim as a business expense. These decisions can make a big difference to your tax bill — and your peace of mind.
Let’s make it simple: here’s a beginner-friendly guide to allowable expenses, based on HMRC rules and what I see with clients every day.
What Is a Business Expense?
A business expense is a cost that’s “wholly and exclusively” for your work.
That means you wouldn’t have spent the money if it weren’t for running your business.
It doesn’t have to be big — even a £5 stationery order counts. But it does need to have a clear business purpose.
💡 Think of it like this: Would you buy this if you didn’t have your business? If the answer’s no, it might be claimable.
Common Claimable Expenses
Below is a list of common business expenses for sole traders — ones that HMRC generally allows if they’re used wholly and exclusively for your work:
✅ Office and Admin
- Business stationery and printer ink
- Postage and delivery fees
- Phone and broadband (business use only or split proportionally)
- Software subscriptions (e.g., QuickBooks, Canva, Microsoft 365)
✅ Travel and Transport
- Business mileage (45p per mile up to 10,000 miles)
- Parking and tolls
- Public transport for business trips
- Hotels and meals (when travelling for business)
⚠️ Note: You can’t claim your usual commute or travel to your regular workplace.
✅ Marketing and Promotion
- Website hosting and domain costs
- Social media ads and sponsored posts
- Business cards and flyers
- Branding, logos, photography
✅ Equipment and Supplies
- Tools, materials, and stock
- Computers, printers, or tablets
- Uniforms or branded clothing
🧾 You might need to claim these as capital allowances depending on the value — I can help you check.
✅ Professional Services
- Accountant or bookkeeper fees 😉
- Legal advice
- Insurance (e.g. professional indemnity, public liability)
✅ Premises and Utilities
If you work from home, you can claim a proportion of:
- Rent or mortgage interest
- Council tax
- Electricity, gas and water
- Home insurance (if relevant)
You can either calculate the actual proportion or use HMRC’s simplified flat rate based on hours worked.
What You Can’t Claim
Now for the other side of the coin — the things that might seem fair game, but aren’t allowed by HMRC:
❌ Personal Expenses
- Netflix or Spotify (even if you listen while working)
- Family groceries
- Holidays (even with some business elements)
- General clothing, unless it’s protective or branded
❌ Mixed-Use Items (Unless Carefully Split)
If something is used for both work and personal life — like your mobile phone or laptop — you can only claim the business portion. HMRC expects you to make a reasonable estimate or keep usage records.
Watch Outs: What Might Raise a Red Flag?
HMRC doesn’t need receipts for every claim when you file, but they can ask to see them if they ever investigate.
Red flags include:
- Big expenses that don’t match your type of business
- Meals, entertainment, or clothing without a clear work reason
- Claims that look too regular or too high without supporting records
📂 Keep your receipts (physical or digital), make notes on how something was used for business, and aim to be consistent. I help clients set up simple systems for this.
Real-Life Examples
Here’s a quick side-by-side to show what’s usually allowed — and what’s not:
| Expense | Claimable? | Notes |
|---|---|---|
| Mobile phone bill | ✅ Partially | Claim business-use portion only |
| Canva Pro subscription | ✅ Yes | Design tool used for marketing |
| Netflix | ❌ No | Personal entertainment |
| Branded hoodie with logo | ✅ Yes | Treated as uniform |
| New handbag | ❌ No | General clothing, not allowable |
| Train to client meeting | ✅ Yes | Business travel is allowed |
| Weekly food shop | ❌ No | Unless it’s purely catering for an event |
How to Stay on the Safe Side
Here’s a simple way to stay compliant:
- Separate business and personal – ideally use a dedicated business bank account.
- Keep good records – receipts, invoices, and notes.
- Ask for help if unsure – a quick check now can save headaches later.
You’re not expected to know everything — and HMRC doesn’t expect perfection — but being thoughtful about your expenses goes a long way.
Final Thoughts
Understanding what you can claim isn’t just about tax savings — it’s about feeling confident and in control of your finances.
If you’re still not sure what applies to your situation, that’s completely normal. Every business is different, and I’m here to help.
Knowing which business expenses for sole traders are allowed helps you avoid overpaying tax or missing out on simple deductions.
Check out my bookkeeping services for ongoing support with your expenses and records.
Got questions about your own expenses? Book a free discovery call or browse my bookkeeping services.
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