Allowable expenses for UK sole traders: examples and how to record them

Allowable expenses are the business running costs a UK sole trader can deduct from income to work out taxable profit. Examples include office costs, business travel, stock, insurance, advertising and trade subscriptions. Personal spending, everyday clothing, client entertaining and fines are not allowable.

This is general information, not tax advice. Tax rules and rates change. Check the linked gov.uk pages for the current position, and speak to an accountant or HMRC if you're unsure about your own situation.

How allowable expenses work

If you're self-employed, you pay Income Tax on your taxable profit: income minus allowable expenses. Allowable costs must be for the business — not personal drawings. If you use something for both business and personal use, you claim only the business share.

The £1,000 trading allowance is an alternative to claiming expenses. If you use it, you cannot also deduct your actual costs. Compare both options for your situation on gov.uk.

For the overall process (records, trading allowance summary), see how to claim expenses as a sole trader in the UK.

Office and admin

Often allowable: stationery, printer ink, postage, phone and internet (business share), software subscriptions used for work.

Usually not: personal mobile use with no business split; domestic broadband with no reasonable apportionment.

Travel

Often allowable: train, bus and taxi fares for business trips; parking; vehicle costs for business travel (or simplified mileage — check current rates on gov.uk simplified expenses).

Usually not: commuting from home to a regular workplace; fines and parking penalties.

InvoFlow does not track mileage — record business journeys separately if you use HMRC mileage rates.

Stock, materials and equipment

Often allowable: goods you resell; materials used in your work; tools and equipment (some items may fall under capital allowances — ask your accountant).

Professional and financial costs

Often allowable: professional indemnity or business insurance; membership of trade bodies; bank charges on a business account; accountancy fees for business work.

Usually not: the fee for preparing and submitting your Self Assessment tax return (see FAQ below).

Marketing

Often allowable: website hosting, online advertising, business cards, branded materials.

Usually not: entertaining clients (meals, events) — HMRC treats most client hospitality as non-allowable.

Working from home

You may claim a proportion of heating, electricity, council tax, mortgage interest or rent, and internet — based on business use — or use HMRC's simplified expenses flat rate for working from home. Check gov.uk for the current method and rates.

How to record each expense

1. Keep the receipt or invoice when you pay.
2. Note date, supplier, amount and VAT if shown.
3. Add a short business-purpose note if needed.
4. Group by month or quarter before sending to your accountant.

InvoFlow Individual helps with capture and handoff: scan receipts, check OCR fields, build a claim, then email a read-only link or export a PDF. See how to send expense claims to your accountant and InvoFlow for sole traders.

Frequently asked questions

Next steps

• Re-read gov.uk: expenses if you're self-employed before you file.
• Ask your accountant about capital items and mixed-use costs.
• Try Individual if you want digital receipt capture and accountant handoff.

Related guides

• UK employee expense management: a practical guide for finance adminsHow UK SMEs run capture, approval, and reimbursement (or export) without email threads and missing VAT receipts.
• How to claim expenses as a sole trader in the UKWhat sole traders can claim as business expenses, what records HMRC expects, and how to keep receipts organised for Self Assessment.
• Receipt to Reimbursement: How to Turn a Receipt Photo into an Approved Expense ClaimLearn how to go from receipt to reimbursement in four simple steps. Snap or upload a receipt, extract the details automatically, and submit a claim your org can approve fast.
• How to send expense claims to your accountant (UK guide)A step-by-step guide for UK sole traders: what your accountant needs for each expense, how often to send it, and how to do it with a scanned receipt.