Allowable Expenses for Self-Employed: What HMRC Lets You Claim

Every pound of allowable expenses you claim reduces your taxable profit — and therefore reduces the Income Tax and National Insurance you pay. Yet many self-employed people leave money on the table because they do not know what they can legitimately claim, or they are too cautious about claiming expenses they are perfectly entitled to.

This guide is a comprehensive list of every category of allowable expense for self-employed sole traders in the 2025/26 tax year. It also covers the expenses people commonly try to claim but cannot.

The Golden Rule

An expense is allowable if it is incurred wholly and exclusively for the purpose of your trade or business. This does not mean the expense has to be essential or the cheapest option available — it just has to be genuinely for business purposes and not for personal benefit.

If something has a dual purpose (partly business, partly personal), you may be able to claim the business proportion. The key is that you must be able to identify and justify the split.

Office and Premises Costs

Working from Home

If you work from home, you can claim a proportion of your household running costs. There are two methods:

Simplified expenses (flat rate): Based on the hours you work from home each month:

| Hours worked per month | Flat rate | |----------------------|-----------| | 25 to 50 hours | £10 per month | | 51 to 100 hours | £18 per month | | 101 hours or more | £26 per month |

Actual costs method: Calculate the proportion of your home used for business (for example, one room out of five) and claim that proportion of rent or mortgage interest, council tax, electricity, gas, water, broadband, and home insurance. This method requires more record keeping but can yield a higher claim.

Rented Office or Workshop

If you rent separate business premises, the rent, business rates, utilities, insurance, and cleaning costs are all fully allowable.

Office Supplies

Stationery, printer ink, paper, postage, and similar consumables are allowable in full.

Travel and Transport

Business Mileage

If you use your own vehicle for business, claim either the HMRC approved mileage rate (45p per mile for the first 10,000 miles, 25p thereafter) or actual running costs. You cannot claim for commuting to your regular place of work.

Public Transport

Train, bus, and tube fares for business journeys are allowable. Keep your tickets or booking confirmations.

Taxis

Taxi fares for business journeys are allowable. Taxis home after late working are not — HMRC considers those a personal expense.

Accommodation and Subsistence

If a business trip requires an overnight stay, the cost of accommodation is allowable. Reasonable meals during business trips away from your normal place of work are also allowable. "Reasonable" means sensible and proportionate — a standard hotel and a meal, not a five-star suite and a tasting menu (unless your business context genuinely justifies it).

Parking and Tolls

Business parking charges and road tolls are allowable. Parking fines are not — HMRC does not allow any fines or penalties.

Clothing

What You Can Claim

Clothing is one of the most misunderstood expense categories. You can only claim for:

• Uniforms or protective clothing — overalls, hard hats, high-visibility jackets, safety boots, and similar items required for your work.
• Costumes — if you are a performer and need specific costumes for your work.
• Branded clothing — items prominently displaying your business logo that you would not wear outside of work.

What You Cannot Claim

Everyday clothing, even if you only wear it for work. A freelance consultant's suits, a photographer's smart casual outfits, and a personal trainer's gym wear are all considered personal clothing and are not allowable.

The test is whether the clothing is specific to the job and would not be worn in everyday life. A builder's steel-toe boots pass this test. A consultant's blazer does not.

Staff Costs

If you employ anyone — including subcontractors — the following costs are allowable:

• Salaries and wages
• Employer's National Insurance contributions
• Employer pension contributions
• Recruitment costs (advertising, agency fees)
• Training costs for employees
• Benefits in kind (though these have their own tax implications)
• Subcontractor payments (net of any CIS deductions if applicable)

Financial Costs

Bank Charges and Interest

Business bank account charges, overdraft interest, and interest on business loans are allowable. Interest on personal loans or credit cards is not, unless the borrowing was used entirely for business purposes.

Insurance

Business insurance premiums are allowable, including:

• Professional indemnity insurance
• Public liability insurance
• Employer's liability insurance (compulsory if you have employees)
• Business contents insurance
• Business interruption insurance
• Cyber insurance

Accountancy and Tax Advice

The cost of hiring an accountant to prepare your business accounts and tax return is allowable. Tax advisory fees relating to your business are also allowable. However, the cost of personal tax advice unrelated to your business is not.

Bad Debts

If a customer fails to pay you and you have already included the income in your accounts, you can claim the unpaid amount as a bad debt expense once you have given up trying to recover it.

Marketing and Advertising

All business marketing costs are allowable:

• Website hosting and domain names
• Online advertising (Google Ads, Facebook Ads, LinkedIn Ads)
• Print advertising
• Business cards and flyers
• Networking event entrance fees
• Trade show costs
• Sponsorship (provided it is genuinely for business promotion)
• Email marketing software
• Social media management tools

Professional Fees and Subscriptions

Professional Memberships

Subscriptions to professional bodies relevant to your work are allowable — for example, membership of the Chartered Institute of Marketing, the Federation of Small Businesses, or a relevant trade association.

Legal Fees

Legal fees are allowable if they relate to the running of your business — for example, chasing unpaid invoices, defending a business dispute, or reviewing a commercial contract. Legal fees for buying property or other capital transactions are not revenue expenses and are treated differently.

Software and Subscriptions

Software subscriptions used for your business are allowable — accounting software, design tools, project management platforms, cloud storage, communication tools, and industry-specific software.

Training and Development

Training courses and qualifications are allowable if they update or maintain existing skills relevant to your current business. A web developer attending a course on a new programming language, for example, can claim the cost.

What you cannot claim is the cost of training to enter a new profession or acquire skills for a completely different line of work. If a plumber trains to become an electrician, the training costs are not allowable against their plumbing income.

Books, journals, and online courses related to your current business are generally allowable.

Repairs and Maintenance

Repairs to business equipment, tools, and premises are allowable. This includes:

• Computer repairs
• Vehicle repairs (if claiming actual costs rather than mileage)
• Workshop or office repairs
• Tool repairs and sharpening

Improvements (making something better than it was before) are capital expenditure and must be claimed through capital allowances rather than as a revenue expense.

Telephone and Internet

The business proportion of your phone bill and broadband costs is allowable. If you have a dedicated business phone line, the full cost is allowable. If you use a personal phone for business, you need to estimate the business proportion and claim only that.

Mobile phone contracts are a grey area. HMRC accepts that you can claim the business proportion, but you need to be able to justify the split.

What You Cannot Claim

To be clear, the following are never allowable:

• Personal expenses — groceries, personal travel, entertainment for yourself.
• Client entertainment — the cost of taking clients out for meals or events is not allowable for tax purposes, even though it is a legitimate business activity. This is one of the most commonly misunderstood rules.
• Fines and penalties — parking fines, speeding fines, late filing penalties, and any other fines or penalties.
• Everyday clothing — as detailed above.
• Donations to political parties — though charitable donations may qualify for tax relief through a different mechanism (Gift Aid).
• Capital expenditure — claimed through capital allowances, not as a revenue expense.
• Your own drawings — money you take out of the business for personal use is not an expense.

How Accounted Makes Expense Tracking Effortless

Keeping track of every allowable expense across all these categories is a significant administrative task. This is exactly what Accounted is built for. Penny, the AI bookkeeper, automatically categorises your bank transactions into the correct expense categories, flags anything that might not be allowable, and prompts you for clarification when a transaction could be business or personal.

You do not need to know the rules by heart. Penny knows them for you. Every allowable expense is captured, categorised, and included in your tax calculation — so you never overpay tax because you forgot to claim something.

Start your free trial of Accounted today and make sure you claim every expense you are entitled to — automatically, accurately, and without the spreadsheets.

Related Reading

• Tax Guide for Florists and Floral Designers

• Tax Guide for Personal Chefs and Private Cooks

• Tax Guide for Agency Nurses: Tax, Expenses, and IR35

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