Key takeaways
- An expense is claimable when it is incurred wholly and exclusively for the business.
- You can claim premises, utilities, equipment, travel, insurance and professional costs among others.
- Client entertaining is not deductible; most commuting between home and a fixed workplace is not either.
- Practical solutions carry fixed simplified costs you can use instead of apportioning actual expenses.
- Keep receipts for six years; the claim is made on your Self Assessment, not with each invoice.
What counts as an allowable expense
You can claim the business costs you actually incurred, provided they pass the wholly and exclusively test — the cost is for the business and only the business. Common allowable expenses for a UK sole trader include:
- Office and premises — rent, business rates, utility bills, and the cost of using your home for work.
- Equipment and tools — computers, phones, machinery and repairs, or the flat-rate deduction where you use one.
- Travel — fuel, train fares, parking and hotels for business journeys (but not the commute to a fixed workplace).
- Insurance and legal — professional indemnity and public liability cover, and accountancy and legal fees.
- Marketing — website costs, advertising, stationery and business cards.
Keeping a full invoice for every job matters here for the income side of the equation: your profit is income minus allowable expenses, and a clean set of issued invoices makes the income figure in your Self Assessment easy to reconcile with your bank statements.
What you cannot claim
Some costs are never allowable, and a few are only allowable with conditions:
- Client entertaining — meals and hospitality for clients are generally not deductible, even though they feel like business costs.
- Commuting — travel between home and a fixed workplace is usually not allowable, even if you worked on the way.
- Personal use — the personal element of mixed costs. A phone used half for home is only half allowable, unless you use the simplified deduction.
- Capital items above limits — the full cost of a van or a computer is usually claimed through capital allowances (or the annual investment allowance) rather than as an immediate expense.
The simplified expenses scheme
Instead of apportioning actual costs, you can use fixed simplified costs for three categories: working from home (a flat amount per hour or month), business mileage on your own vehicle, and using your home as your main office. These fixed rates remove the need to work out the business proportion of each bill. Many sole traders find the flat rate simpler and no more generous or punitive than the real maths.
Receipts, records and how long to keep them
You do not submit receipts with your Self Assessment, but you must keep them in case HMRC asks later. HMRC requires you to keep your business records — invoices you issued and received, expense receipts, bank statements — for at least six years after the relevant tax year ends. Receipts can be digital scans or photos; what matters is that they exist and are legible.
The invoice is part of the record too. When you download an invoice from our sole trader template, you keep two things at once: the document you sent the client, and the income record that belongs in your accounts.
Income and expenses belong together
Your profit figure — turnover less allowable expenses — is what your tax and National Insurance are calculated on. A simple habit cuts the fiddly work at tax time: issue an invoice for every job (so every pound of income is accounted for) and file the receipt for every business cost on the day it happens. By January it is arithmetic, not archaeology.
Keep income and costs straight
Issue a compliant invoice for every job so your income figure is easy to reconcile against your expenses at tax time — free, no sign-up.
Frequently asked questions
What counts as an allowable expense for a sole trader?
A business cost incurred wholly and exclusively for the trade. Common allowable expenses include premises costs, equipment, business travel, insurance, legal and accountancy fees, and marketing. Personal spending and client entertaining are not allowable.
How long do I need to keep receipts?
HMRC requires sole traders to keep business records for at least six years after the end of the relevant tax year. Receipts may be digital, but they must exist and be legible.
What is the simplified expenses scheme?
Fixed simplified costs you can use instead of apportioning the business share of actual bills, covering working from home (a flat amount), business mileage on your own vehicle, and using your home as your main office.
Can I claim the commute to a client?
Travel to a temporary workplace or to a client is generally allowable; the daily commute between home and a fixed workplace is not. The distinction matters to HMRC and affects how much you can claim.
Do I need anything besides the invoice to claim expenses?
Yes — the receipt for each cost. The invoice proves the income, the receipt proves the expense, and HMRC may ask to see either. Claimable costs are entered on your Self Assessment, not attached to invoices.
Free invoice tools
General guidance only — not legal, tax or accounting advice. Rules and rates can change; check HMRC's current guidance for the latest. Last reviewed 8 October 2026.