Getting expenses for self-employed work wrong can cost you in either direction. Claim too little and you may pay more income tax than necessary; claim costs that do not qualify and HMRC may question your return. The rules can feel unclear when a single bill covers both business and personal use or when several calculation methods are available.
This guide explains which costs you can claim, how actual and simplified expenses differ, what limits apply, and which records you should keep before completing your Self Assessment tax return.
Key Takeaways
- Eligible expenses for self-employed work reduce taxable profit, so you pay income tax only on the remaining amount.
- You can only claim business expenses incurred wholly and exclusively for running your trade.
- For certain costs, you can choose between actual expenses and HMRC’s simplified expenses.
- The £1,000 trading allowance can replace expense claims, but you cannot use both for the same income.
- Keep accurate records and supporting evidence for at least five years after the relevant Self Assessment filing deadline.
What Counts as an Allowable Expense?
An allowable expense is a cost you deduct from business income before calculating taxable profit and income tax. To qualify, the cost must be incurred wholly and exclusively for your trade.
If a purchase has both personal and business uses, you can claim only the business portion. Suppose your annual phone bills total £600 and calls and data used for work account for 60%. You could claim £360, but not the full bill. Keep the calculation in your records so you can explain how you arrived at the figure if HMRC asks.
Before you claim allowable expenses, compare them with the £1,000 trading allowance. This tax-free allowance can be deducted from gross trading income rather than from itemised costs.
You cannot use the allowance and claim business expenses against the same income. If your actual costs exceed £1,000, claiming them may reduce taxable profit more; if they are lower, the allowance may be more beneficial.
Most sole traders now use cash basis accounting by default, recording income when received and costs when paid. You can opt for traditional accounting, which records income and expenses when invoiced or billed. Some rules, including those for capital purchases and bad debts, differ between the two methods.
Allowable Expenses List for the Self-Employed
Most costs associated with running your trade can be deducted before calculating taxable profit. However, you should include only the amounts relating to business use. According to HM Revenue and Customs, the self-employed allowable expenses list comprises the following categories:
| Category | What you can claim |
| Office supplies and equipment | Stationery, printing, postage, accounting software, phone bills, computers and small tools. Premiums for Portable Equipment Insurance or Workplace Contents Insurance may also qualify. Some assets may be eligible for capital allowances. |
| Business premises | Business premises rent, utility bills, cleaning, repairs and business rates, but not the purchase price. |
| Travel and mileage | Business fares, parking, mileage or eligible vehicle costs, plus accommodation and meals on qualifying overnight business trips. |
| Marketing and advertising | Advertising, printed materials, directory listings, domain fees and website costs. |
| Legal, accountancy and professional fees | Accountancy charges, professional fees and business-related legal costs, but not fines or penalties. |
| Business insurance | Premiums for policies covering trade risks, such as the Combined Business Insurance, but not personal protection. |
| Bank charges and loan interest | Business bank charges, overdraft fees and interest on business loans, but not repayment of the principal. |
| Staff and subcontractors | Salaries, employer pension contributions, employer’s National Insurance contributions, agency fees and subcontractor costs. |
| Stock and raw materials | Goods for resale, raw materials, packaging and direct production costs. |
| Protective clothing and uniforms | Uniforms, protective clothing and costumes, but not ordinary clothing worn for work. |
| Professional subscriptions and publications | Fees for relevant professional bodies, trade journals and work-related publications. |
| Training | Training that maintains or develops knowledge and skills within your existing business area. Training to start a separate business or enter an unrelated profession doesn’t qualify. Check this distinction before you claim business expenses for a course. |
Note that bad debts can be claimed only if you use traditional accounting and previously included the income in turnover. They are not deductible under cash-basis accounting because unpaid customer invoices are not recorded as income. The debt must also be genuinely irrecoverable rather than merely overdue.
Working From Home: What You Can Claim
You can include home office costs in your self-employed expenses if you regularly work from home. You can use either actual costs or HMRC’s simplified expenses, but the same household costs can’t be claimed twice. The better method depends on your working pattern and the size of your bills.
Under the actual cost method, calculate a reasonable business portion of utility bills, such as heating, electricity and water, plus council tax, mortgage interest or rent. You can divide bills by the number of rooms, then adjust them based on how much time each room is used for work. If one of five rooms is used only for business, the starting share is 20%. If it also has personal use, reduce the claim accordingly.
Alternatively, simplified expenses provide a monthly flat rate based on hours worked from home: £10 for 25–50 hours, £18 for 51–100 hours and £26 for 101 hours or more. The flat rate covers general home running costs but not telephone or internet. Calculate the business portion of your phone bills and broadband separately.
Whichever method you choose, keep bills, calculations and notes explaining your allocation. This evidence supports the figures when you claim allowable expenses and helps you answer questions if HMRC reviews your return. Apply the same reasonable approach consistently throughout the tax year.
Claiming Car and Mileage Costs
You can include eligible vehicle use in your self-employed expenses through either simplified mileage or actual costs. For the 2026/27 tax year, the simplified flat rate for cars and goods vehicles is 55p per business mile for the first 10,000 miles and 25p thereafter.
To claim business travel expenses, keep a mileage log showing the date, destination, business purpose, and distance for each journey. The rate already accounts for fuel, servicing, repairs, vehicle insurance and depreciation, so you can’t claim these running costs separately for the same vehicle.
With the actual cost method, record fuel, repairs, insurance and other running costs, then claim only the business-use share. You may also claim capital allowances on the vehicle’s purchase cost where applicable. This method requires more detailed records but may suit an expensive car used mainly for business.
Once you choose simplified mileage or capital allowances for a particular vehicle, you must continue using that method while the vehicle remains in the business. Personal journeys, such as travelling between your home and workplace, don’t qualify. Trips to clients or temporary locations may be claimed.
Capital Allowances vs Allowable Expenses
The main difference between these two tax relief types is that capital allowances cover your long-term assets, not day-to-day expenses. Here’s a detailed comparison:
| Point | Allowable expenses | Capital allowances |
| Applies to | Day-to-day business costs used up within the trade. | Qualifying assets bought for continued business use. |
| When claimed | In the tax year the cost belongs to under your chosen accounting method. | In the accounting period when the asset qualifies, subject to allowance rules. |
| Return entry | Included in the relevant expense category on your Self Assessment tax return. | Reported separately in the capital allowances section. |
| Examples | Rent, utility bills, insurance, office supplies and professional fees. | Machinery, equipment and business cars. |
| How relief works | The business amount is deducted as a current expense. | The deduction may be made using the annual investment allowance, first-year allowances, or writing-down allowances. |
Under cash basis accounting, most capital expenses are treated as allowable business expenses rather than capital allowances, except for purchasing cars. Purchases of land and buildings can’t be deducted as ordinary expenses.
What You Cannot Claim
The following costs typically cannot be deducted from taxable profit as self-employed allowable expenses:
- Client entertainment, including meals, hospitality and event tickets
- Your own salary or drawings from the business
- Ordinary clothing that is not a uniform, costume or protective clothing
- Personal travel and ordinary commuting
- Fines and penalties
- Loan or mortgage principal repayments (qualifying business interest may be deductible)
- Private meals, except allowable subsistence on qualifying business trips.
These are not allowable business expenses because they are personal, punitive or capital in nature rather than incurred wholly and exclusively for your trade. A payment from a business account is not automatically deductible; the purpose matters more than the payment method.
Keep personal and business portions of mixed bills separate. Before you claim business expenses, double-check any uncertain costs rather than assuming they qualify.
How to Claim Expenses on Your Self Assessment Return
Claiming expenses for self-employed work through Self Assessment involves a few checks rather than submitting each receipt separately. Good records make the process easier if figures are questioned later.
- Keep receipts, invoices, bank statements and digital confirmations for every business cost. You don’t need to attach them to your tax return, but HMRC may request proof.
- Group your deductible costs by category, then remove personal amounts from mixed-use bills.
- Enter category totals in the relevant self-employment fields. If you claim allowable expenses, do not also deduct the trading allowance against the same income.
- Compare figures with your records, correct errors, and submit your online tax return by 31 January following the end of the tax year.
For example, with £60,000 in trading income and £5,000 in allowable business expenses, taxable profit is £55,000. After the £12,570 Personal Allowance, taxable income is £42,430. The actual tax saving depends on your tax rate and circumstances.
Making Tax Digital for Income Tax: What Changed from April 2026
HMRC used 2024/25 returns to identify who had to use Making Tax Digital for Income Tax (MTD) from 6 April 2026. It’s now required for sole traders and landlords with more than £50,000 in combined gross self-employment and property income.
You must use compatible software to keep digital records and submit quarterly updates. If you run multiple businesses, keep separate records and send a separate update for each. These updates don’t replace your final annual tax return.
MTD requires digital transaction records for income and expenditure, but you should still retain receipts, invoices, or copies as supporting evidence. Not all paper documents need to be scanned. The rules for self-employed expenses and business-use apportionment remain unchanged.
Frequently Asked Questions
Can I Claim Expenses Without Receipts?
Yes, you don’t need to submit receipts, but you must be able to support the expense with evidence. HMRC can ask for proof of self-employed allowable expenses. Bank statements, invoices and electronic confirmations can help. When you claim business expenses, keep records for at least five years. Without proof, HMRC may disallow it.
How Far Back Can I Claim Expenses?
You normally claim self-employed allowable expenses in the tax return covering the accounting period in which you paid or incurred them, depending on your accounting method. If you omit eligible costs, you can usually amend the return within 12 months of its filing deadline. For 2024/25, amendments are accepted until 31 January 2027.
Is Business Insurance an Allowable Expense?
Yes, business insurance premiums incurred solely for your trade generally qualify as self-employed allowable expenses. Examples include Professional Indemnity Insurance, Public Liability Insurance, employers’ liability cover, and premises or equipment insurance. Personal life or private health policies don’t qualify. For vehicle insurance, claim only the business portion, unless simplified mileage rates already cover it.
What to Check Before Your Next Self Assessment Deadline
First, compare the £1,000 trading allowance with actual costs; you can’t use both against the same income. Review each category against HMRC’s deduction rules and remove private portions.
When you claim business expenses, check totals against receipts, invoices and bank statements. Compare actual and simplified home-working costs, then use the more suitable calculation. For vehicles, continue with your chosen method.
Keep digital records in compatible software for MTD, but you don’t need to scan every paper receipt. Finally, review your self-employed expenses and submission dates. If anything is unclear, ask an accountant before filing.
