Running your own business involves more than earning money. You also pay for equipment, travel, software and other everyday costs. Fortunately, many of these qualify as allowable expenses for the self-employed, which means they can reduce your taxable profit.
Common claimable expenses include office supplies, business insurance, work-related travel, professional fees and certain home-working costs. However, the amount you can claim depends on how the expense relates to your business.
This guide explains what self-employed people can claim in the UK, how to calculate deductions and what records HMRC expects you to keep.
Table of Contents
What Are Allowable Expenses for the Self-Employed?
Allowable expenses are qualifying business costs deducted from your income when calculating taxable trading profits.
For example, suppose your annual business figures are:
- Total business income: £30,000
- Allowable expenses: £5,000
- Trading profit before other adjustments: £25,000
Your Income Tax calculation then takes account of your taxable income, relevant allowances and personal circumstances.
Claiming £5,000 in expenses does not mean receiving £5,000 back from HMRC. Instead, it reduces the profit on which tax is calculated.
For a fuller explanation, see our guide to how self-employed tax is calculated.
According to HMRC’s allowable expenses guidance, these deductions are available to eligible sole traders and individuals in business partnerships. Limited companies follow different rules.
UK Self Assessment Tax Return Diploma
What Expenses Can You Claim When Self-Employed?
If you’re self-employed, you can claim many of the everyday costs involved in running your business. The main thing to remember is that the expense must be related to your work. If something is used for both business and personal purposes, you can generally claim only the qualifying business portion.
Here are some common allowable expenses for self-employed people in the UK:
Office supplies and equipment: Items you need for your work, such as stationery, printers, laptops, office furniture and business software. The tax treatment of certain equipment may depend on your accounting method.
Phone and internet costs: Business calls, broadband and mobile phone bills. If you also use these services personally, you can claim the qualifying business proportion.
Stock and materials: Products purchased for resale, raw materials, packaging and supplies needed to produce goods or provide services.
Marketing and advertising: Costs of promoting your business, including website hosting, online advertisements, business cards and printed promotional materials.
Professional services: Qualifying fees paid to accountants, solicitors or other professionals for services directly related to your business.
Business insurance and bank charges: Relevant insurance premiums, such as public liability or professional indemnity insurance, along with eligible business banking fees.
Staff and subcontractor costs: Wages paid to employees and payments to freelancers or subcontractors who carry out work for your business.
Training and professional development: Courses and training that improve your existing business skills, update your professional knowledge or support your current business activities.
For example, if you’re a self-employed graphic designer, you may be able to claim the cost of design software, a work laptop, website hosting and relevant professional training.
Remember that an expense is not automatically allowable just because it appears in one of these categories. What matters is its business purpose and whether it meets HMRC’s rules.
Office Supplies, Equipment and Software
Everyday office costs such as stationery, printer supplies, postage and business software subscriptions are generally allowable.
Equipment such as laptops, cameras and machinery may also qualify. However, the tax treatment can depend on whether you use cash basis or traditional accounting and whether capital allowances apply.
For instance, a freelance graphic designer may claim qualifying costs for design software and a computer used for work. If the computer is also used personally, the business proportion must be considered.
Phone, Internet and Business Running Costs
Telephone contracts, broadband and other communication costs may qualify when used for business.
If you use one mobile phone for both work and personal calls, you should calculate the qualifying business portion.
Other potentially allowable running costs include rent, electricity, heating and business rates for eligible business premises.
Stock, Materials and Business Purchases
Self-employed people who sell products can generally claim qualifying costs for goods purchased for resale, materials and packaging.
For example, a jewellery maker may deduct the cost of beads, clasps and packaging used to produce products for customers.
Similarly, a decorator may claim qualifying paint and materials purchased for client projects.
Marketing, Advertising and Professional Services
Promoting your business often creates deductible costs.
These may include website hosting, online advertising, printed promotional materials and qualifying professional services.
Fees paid to an accountant for preparing business accounts may also qualify, while personal financial services require separate consideration.
Business Insurance, Bank Charges and Staff Costs
Business insurance, including professional indemnity and public liability cover, is generally allowable when relevant to your trade.
Other potential deductions include business bank charges, employee wages and payments to subcontractors.
The expense must relate to genuine business activities and satisfy the relevant tax rules.
Training and Professional Development
Training costs may qualify when they improve skills already used in your business, update industry knowledge or support relevant business administration.
For example, a self-employed bookkeeper taking a course to improve their existing accounting software skills may qualify for a deduction.
HMRC’s training expense rules distinguish relevant business development from courses undertaken to establish an unrelated new business.
For those developing their tax knowledge, Skill Up offers the UK Self Assessment Tax Return Diploma, covering tax calculations, deductions, financial records and Self Assessment procedures. Whether the course fee qualifies as a business expense depends on the learner’s circumstances and existing business activities.
Can You Claim Expenses for Working From Home?
If you work from home, you may be able to claim part of your household running costs.
HMRC provides two main approaches.
Claiming Actual Home-Working Costs
You can calculate the qualifying business proportion of expenses such as heating, electricity and certain housing costs.
Suppose your monthly electricity bill is £120, and a reasonable calculation shows that 20% relates to business use.
Your potential deduction would be:
£120 × 20% = £24 per month
The calculation should reflect genuine business use, considering factors such as the space used and working hours.
Using HMRC Simplified Expenses
If you’re self-employed and work from home, HMRC allows you to use a simplified method to claim certain household expenses. Instead of calculating the exact business portion of your heating and electricity bills, you can claim a fixed monthly amount based on how many hours you work from home.
The amount you can claim depends on your monthly working hours:
- 25–50 hours per month: You can claim £10.
- 51–100 hours per month: You can claim £18.
- 101 hours or more per month: You can claim £26.
For example, if you work from home for 110 qualifying hours every month, you can claim £26 per month. Over 12 months, that adds up to £312 in allowable expenses.
These flat rates cover certain household running costs but do not include telephone and internet expenses. You can calculate and claim the qualifying business portion of those costs separately.
This method can make record-keeping easier because you don’t need to calculate the business percentage of every covered household bill. However, you should still keep a record of your working hours to support your claim.
For more details, see HMRC’s simplified home-working guidance.
Can You Claim Business Travel and Mileage?
Travel expenses may qualify when journeys are necessary for your business.
Examples include visiting clients, travelling between business locations and attending work-related meetings.
Ordinary commuting to a permanent workplace is generally excluded.
HMRC Mileage Rates for 2026/27
Eligible self-employed individuals can use simplified mileage rates instead of claiming actual vehicle running costs.
For the 2026/27 tax year, HMRC’s vehicle expense rates are:
- Cars and goods vehicles: 55p per mile for the first 10,000 business miles.
- Additional business mileage: 25p per mile.
- Motorcycles: 24p per mile.
For example, 1,000 qualifying business miles in a car would produce a deduction of £550.
The simplified mileage method cannot be combined with actual running costs for the same vehicle. Previous claims and eligibility conditions also influence which method you can use.
What Expenses Can You Not Claim?
Knowing which expenses are excluded is just as useful as identifying allowable costs.
HMRC generally does not permit deductions for:
- Personal shopping and household spending.
- Ordinary clothing, even when worn for work.
- Client entertainment and most hospitality costs.
- Personal portions of phone, internet or vehicle expenses.
- Tax fines and penalties.
- Repayments of the capital element of loans.
- Spending unrelated to business activities.
For example, a self-employed consultant cannot normally deduct the cost of an everyday suit simply because it is worn during client meetings. Qualifying protective clothing and uniforms have different rules.
Property rental expenses also follow separate rules. Landlords can refer to our guide to reporting rental income through Self Assessment.
How Do You Calculate Mixed Business and Personal Expenses?
Many sole traders use the same equipment and services for business and personal activities.
When a cost serves both purposes, you need to calculate a reasonable business-use proportion.
Suppose your annual mobile phone bill is £600 and 60% of usage relates to business.
£600 × 60% = £360 allowable business expense
The remaining £240 relates to personal use.
Keep a reasonable basis for your calculation, such as usage records, to support the percentage claimed.
Should You Claim Actual Expenses or the £1,000 Trading Allowance?
The £1,000 trading allowance provides an alternative to deducting actual business expenses for eligible individuals.
For example, if your qualifying expenses total £1,500, claiming actual expenses may be more beneficial than using the £1,000 allowance.
Under HMRC’s trading allowance rules, you generally cannot deduct actual expenses against the same trading income when claiming the allowance.
If you’re deciding which option is more suitable for your business, understanding how the £1,000 trading allowance works can help you compare it with claiming your actual expenses.
How to Claim Allowable Expenses on Your Self Assessment Return
Accurate expense claims begin with organised business records.
Keep Records of Your Business Expenses
Useful records include:
- Receipts and invoices.
- Business bank statements.
- Mileage logs.
- Software subscription records.
- Home-working calculations.
- Evidence supporting mixed-use expenses.
Digital tools can also support bookkeeping and expense management, with some AI applications in finance and accounting helping businesses organise their financial
Under HMRC’s record-keeping requirements, self-employed individuals must generally retain business records for at least five years after the relevant 31 January tax return deadline. Some exceptions apply.
Report Your Expenses Correctly
When completing your Self Assessment tax return, make sure you record your allowable expenses accurately. This helps HMRC calculate your taxable profits based on your actual business income and qualifying costs.
If you’re filing for the first time, you may need to register for Self Assessment and obtain a Unique Taxpayer Reference (UTR). Knowing how to get a UTR number can make the registration process easier.
Depending on your qualifying income, you may also need to follow Making Tax Digital for Income Tax requirements, which involve keeping digital records and using compatible software.
Beyond tax reporting, understanding how AI supports financial reporting may also help business owners make better use of digital tools.
Keeping your financial records organised throughout the year can make filing easier and help you avoid Self Assessment penalties for late submissions or payments.
If you have several income sources or are unsure about more complicated expense claims, you might also want to consider whether you need an accountant for Self Assessment or prefer to manage your return independently.
Final Thoughts on Claiming Self-Employed Expenses
Knowing which business expenses you can claim helps you manage your finances and calculate your taxable profits more accurately. From everyday office costs to travel and professional training, eligible expenses can make a meaningful difference to your tax calculations.
The key is to keep accurate records, separate personal and business spending, and follow HMRC’s rules when claiming deductions.
Good expense management also makes it easier to plan for your Self Assessment tax bill. If you’re required to make advance tax payments, it’s worth knowing how payments on account work so you can manage your finances more effectively.
Frequently Asked Questions About Self-Employed Allowable Expenses
You need reliable evidence supporting your expense claims. Invoices, bank statements and other records may help demonstrate the costs incurred, even when an individual paper receipt is unavailable.
Certain qualifying pre-trading expenses may be deductible under HMRC rules. Eligibility depends on the type of expenditure, when it was incurred and its connection to the business.
Yes, where the laptop qualifies as business expenditure. The amount and method of deduction depend on its business use, your accounting method and any relevant capital allowance rules.
Yes. Qualifying expenses are included when calculating business results, even if the business makes a loss. Whether tax relief is available for that loss depends on separate rules.
No. Personal National Insurance contributions are not deductible business expenses when calculating self-employment trading profits.
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