Allowable Expenses for the Self-Employed: The Full List for 2026/27

If you are self-employed, you can deduct any cost incurred wholly and exclusively for your business from your turnover before tax is worked out. That covers stock, tools, business travel, a share of your home costs, insurance, accountancy, bank charges and advertising — and because expenses reduce both Income Tax and Class 4 National Insurance, every £100 of genuine cost you record is usually worth £26 to £42 off your bill.

The list below runs through each category in turn, shows where HMRC's simplified flat rates beat keeping receipts, and ends with the costs that are never allowable.

Key points

• The test is "wholly and exclusively for the purposes of the trade". Mixed-use costs can be split if the business share is identifiable.
• Basic-rate sole traders save 20% Income Tax plus 6% Class 4 NI on each extra pound of allowable expense — 26p in the pound.
• Simplified expenses let you use flat rates for vehicles and home working instead of working out actual costs.
• If your gross self-employment income is under £1,000, the trading allowance may replace expenses entirely.
• Entertaining clients, drawings, fines and ordinary commuting are never allowable.

How the deduction actually saves you money

Expenses do not come back as a refund cheque; they cut taxable profit. Work out turnover, subtract allowable expenses, and the result is the profit that Income Tax and Class 4 National Insurance are charged on.

For 2026/27 the Personal Allowance is £12,570, Class 4 NI runs at 6% on profits between £12,570 and £50,270 and 2% above that, and the basic rate band covers the first £37,700 of taxable income. So the value of a deduction depends on where your profit sits:

Scottish taxpayers pay Scottish rates on self-employment profit (19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced, 48% top), but the same UK-wide Class 4 rates. A Scottish higher-rate sole trader therefore saves 44p per £1 of expense; an advanced-rate one saves 47p.

Two points follow. First, recording expenses properly matters most when profits are comfortably above the Personal Allowance. Second, there is no benefit in inventing or stretching a claim — the saving is a fraction of the cost, and the cost is real money leaving your account.

Office, home and premises costs

If you rent premises, the rent, business rates, utilities, cleaning, security and repairs are all allowable. So are the everyday running costs of an office: stationery, printing, postage, software subscriptions, domain and hosting fees, phone and broadband used for the business.

Working from home

Most sole traders work from home at least part of the time, and there are two ways to claim.

Simplified (flat rate). Claim a fixed monthly amount based on the hours you work at home each month:

The flat rate covers heat, light and power. Phone and broadband are not included, so you can still claim the business share of those on top.

Actual costs. Add up rent or mortgage interest (not capital repayments), council tax, gas, electricity, water, insurance and repairs, then apportion on a fair basis — usually by number of rooms and the time each room is used for business.

Worked example: flat rate vs actual

Priya is a self-employed designer working roughly 120 hours a month from a spare room. Her home has six rooms, excluding the bathroom and hallways. Annual household costs: £1,450 electricity and gas, £2,100 council tax, £480 home insurance, £420 water — £4,450 in total.

• Simplified: 120 hours a month falls in the top band, so £26 × 12 = £312.
• Actual: £4,450 ÷ 6 rooms = £741.67 for the workroom. She uses it for business 80% of the time, so £741.67 × 80% = £593.

Actual costs give her £281 more of deduction, worth about £73 at basic rate (26%). That is worth the paperwork — but only if she keeps the bills. If she does not, the flat rate is the safer claim. The use of home as office calculator runs both figures side by side, and simplified or actual expenses walks through the choice for vehicles too.

Travel and motoring

Business travel is allowable: train, bus, air and taxi fares, congestion and toll charges, parking (but not fines), and accommodation plus reasonable meals when you stay away overnight on business.

Using your own vehicle

Again there are two routes, and you must stick with one for the life of that vehicle.

Simplified mileage. Claim a flat rate per business mile that covers fuel, servicing, insurance, road tax and depreciation. For cars and vans that is 55p a mile for the first 10,000 business miles in the tax year, then 25p a mile after that. You cannot also claim capital allowances on the vehicle.

Actual costs. Total everything the vehicle costs to run — fuel, insurance, tax, MOT, servicing, repairs, breakdown cover — then claim the business percentage based on a mileage log. You can also claim capital allowances on the business share of the purchase price.

Worked example: mileage vs actual running costs

Tom is a mobile electrician. He drives 14,000 business miles and 6,000 private miles a year in a van that costs £6,800 a year to run.

• Simplified: (10,000 × £0.55) + (4,000 × £0.25) = £5,500 + £1,000 = £6,500.
• Actual: business use is 14,000 ÷ 20,000 = 70%, so £6,800 × 70% = £4,760, plus capital allowances on 70% of the van's cost.

If the van cost £18,000, the Annual Investment Allowance could add £12,600 (70%) of deduction in the year of purchase, making actual costs far larger in year one — but there is nothing left to claim in later years. Mileage is simpler, steadier and needs only a trip log. Check the arithmetic for your own numbers with the mileage allowance calculator.

One trap: travel between home and a place you work at regularly enough for it to be a base is ordinary commuting, and is not allowable. Journeys from your business base to customers, suppliers or temporary sites are.

Equipment, tools and technology

Tools, machinery, computers, cameras, vans and business furniture are capital items rather than day-to-day running costs, so they are handled in one of two ways.

• Cash basis. Most sole traders now use the cash basis by default. Equipment (other than cars) is simply deducted when you pay for it, as an ordinary expense.
• Traditional accruals basis. Claim capital allowances instead. The Annual Investment Allowance lets you write off up to £1,000,000 of qualifying plant and machinery in the year of purchase. Anything outside it attracts writing-down allowances at 18% a year in the main pool, or 6% in the special rate pool. Full expensing is a company relief, not one for sole traders.

Either way, if an item has private use as well, restrict the claim to the business proportion. A laptop used 75% for work gives a 75% deduction.

Smaller running costs sit outside all of this and are straightforwardly allowable: consumables, replacement hand tools, protective equipment, software licences, cloud storage and repairs to existing equipment.

Stock, materials and cost of sales

If you buy goods to resell or raw materials to make something, those are allowable, along with:

• direct materials and components;
• packaging, labels and postage to customers;
• subcontractors and freelancers you pay to do work for you;
• staff wages, employer pension contributions and employer National Insurance (charged at 15% above the £5,000 secondary threshold);
• marketplace, payment-processing and delivery fees.

Under the accruals basis you adjust for opening and closing stock so that only goods actually sold in the year are deducted. Under the cash basis you deduct stock when you pay for it. Goods you take for personal use must be added back at their normal selling price.

Professional, financial and marketing costs

This is the category most often under-claimed. All of the following are allowable when they relate to the business:

• Professional fees — accountant, bookkeeper, solicitor (for trading matters), architect, surveyor.
• Insurance — public liability, professional indemnity, employers' liability, contents and stock cover, van insurance.
• Bank and finance charges — business account fees, card processing charges, overdraft and loan interest, hire purchase interest, leasing charges.
• Marketing — website costs, online and print advertising, mailshots, free samples, trade directory listings. Sponsorship is allowable only where there is a clear business benefit.
• Subscriptions — trade bodies and professional organisations on HMRC's approved list, plus trade journals.
• Training — courses that update or maintain skills you already use in the business. Training to enter a new trade or gain a new qualification is capital in nature and normally refused.
• Clothing — uniforms with a logo, costumes and protective clothing such as steel-toed boots, high-vis and safety goggles.
• Bad debts — specific invoices you have recognised as income and will not be paid for, under the accruals basis only.

If you are VAT registered, claim the net (VAT-exclusive) amounts as expenses and recover the VAT separately. Registration becomes compulsory once taxable turnover passes £90,000 in any rolling 12 months — see GOV.UK on when to register for VAT.

What you can't claim

These are refused regardless of how the cost feels in practice:

• Client entertaining — meals, drinks, hospitality and event tickets for customers or prospects. Staff entertaining is treated differently.
• Your own wages or drawings — money you take out of the business is profit, not an expense.
• Everyday clothing — a suit bought for meetings is not allowable, even if you only wear it for work.
• Ordinary commuting — travel between home and a regular place of work.
• Your own meals — except reasonable subsistence while travelling away from your normal pattern of work.
• Fines and penalties — parking tickets, speeding fines and HMRC late-filing penalties.
• Capital repayments on loans (the interest element is allowable).
• Your own pension contributions — these get tax relief personally, not as a trading deduction. See the pension tax relief calculator.
• Charitable donations from the business — relief comes through Gift Aid on your return instead.
• Childcare, gym membership and personal insurance.

The trading allowance alternative

If your gross self-employment income is £1,000 or less in the tax year, the trading allowance means there is normally nothing to report at all. Above £1,000, you can choose to deduct the flat £1,000 allowance instead of your actual expenses — useful when real costs are tiny, such as a tutoring or consultancy side hustle with £6,000 of income and £300 of costs. You cannot use the allowance and claim expenses on the same trade. The side hustle tax calculator shows which route leaves more in your pocket.

Records you need to keep

Keep invoices, receipts, bank and card statements, a mileage log and a note of the basis you used for any apportionment. Records must be kept for at least five years after the 31 January filing deadline for that tax year. From April 2026, Making Tax Digital for Income Tax applies to sole traders and landlords with gross income above £50,000, which means digital records and quarterly updates rather than one annual summary — a good reason to get categories tidy now rather than at the deadline.

What to do next

Run your costs through the self-employed expenses checker to see which categories you are missing, then use simplified or actual expenses to settle the home and vehicle question with your own numbers. Once you have a total, the self-employed tax calculator turns it into a profit figure and an estimated Income Tax and Class 4 bill for 2026/27.