Allowable Business Expenses UK: Complete Guide to Tax Deductions for Sole Traders

Every pound you claim as a business expense reduces your taxable profit. Here's what you can (and can't) claim in the UK.

The Golden Rule

Expenses must be "wholly and exclusively" for business purposes.

That doesn't mean you can't claim things with some personal use — but you can only claim the business portion.

Example: A laptop used 70% for work = 70% claimable

Office and Premises

You can claim:

• Rent and business rates
• Utility bills
• Property insurance
• Security costs
• Cleaning
• Repairs and maintenance

Working from Home

Two options:

Simplified method: Claim a flat rate without receipts

• 25-50 hours/month: £10/month
• 51-100 hours/month: £18/month
• 101+ hours/month: £26/month

Actual costs method: Calculate the proportion of home used for business (more paperwork, potentially higher claim)

Travel and Vehicles

Business travel is claimable. Commuting is not.

Using Your Own Vehicle

Option 1: Simplified mileage rates

Option 2: Actual costs (fuel, insurance, repairs, tax) — business portion only

Other Travel

• Train, bus, taxi fares
• Flights for business
• Parking while working
• Hotels for business trips
• Meals while travelling

Staff Costs

• Salaries and wages
• Employer's National Insurance
• Pension contributions
• Staff training
• Subcontractor costs (minus CIS)
• Taxable benefits

Professional Fees

• Accountant fees
• Legal fees (business matters only)
• Professional memberships
• Bank charges
• Business loan interest

Marketing and Advertising

• Website hosting and domains
• Online advertising
• Print advertising
• Business cards and brochures
• Trade shows
• Networking events

Equipment and Tools

• Tools for your trade
• Computers and software
• Office furniture
• Machinery
• Work-specific clothing and uniforms

For larger items, you may claim Capital Allowances instead of deducting the full cost.

Other Claimable Expenses

• Business phone and mobile
• Broadband (business proportion)
• Software subscriptions
• Stock and materials
• Packaging and postage
• Insurance (public liability, professional indemnity, etc.)

What You CAN'T Claim

❌ Personal expenses

❌ Fines and penalties

❌ Client entertaining (staff entertaining is usually OK)

❌ Clothing that could be worn outside work

❌ Your own drawings as a sole trader

❌ Commuting to your regular workplace

Keeping Good Records

HMRC requires records for at least 5 years.

For each expense, keep:

• Receipt or invoice
• Date
• Amount
• What it was for
• Business purpose

Track Expenses Automatically

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