Sole Trader Expenses - What Can You Claim? Complete UK Guide

As a UK sole trader, every pound you spend on genuine business costs reduces the profit HMRC taxes. Get this right and you pay significantly less tax without doing anything aggressive - just claiming what you are already entitled to.

This guide covers every category of allowable expense for sole traders in the UK, with clear examples for tradesmen - plumbers, electricians, builders, and anyone who works with their hands.

The golden rule: wholly and exclusively

HMRC allows expenses that are wholly and exclusively for business. This is the test every expense must pass. If you buy something purely for work, you can claim the full cost. If you use something for both work and personal purposes - a phone, a vehicle, your home - you can claim the business proportion, not the whole cost.

You do not need a receipt for every small purchase, but HMRC can ask for records going back 5 years. Keep invoices, bank statements, and a mileage log if you use the mileage method for your vehicle.

Vehicle expenses

For most tradesmen, vehicle costs are the biggest claimable expense. You have two options:

Option 1 - simplified mileage rate

Claim a fixed rate per business mile: 55p for the first 10,000 miles in the tax year, 25p above that. This covers all running costs - fuel, insurance, servicing, road tax, tyres, MOT. You do not need to keep fuel receipts or calculate a business percentage.

You need a mileage log recording the date, start and end address, purpose, and miles for each journey. Use the free mileage log builder to record trips as you go and generate a ready-to-use PDF at year end.

To calculate your annual mileage claim and estimated tax saving, use the HMRC mileage calculator.

Option 2 - actual costs

Claim the actual running costs of your vehicle (fuel, insurance, servicing, road tax, depreciation) multiplied by the business-use percentage. If 80% of your van mileage is business, you claim 80% of all running costs. You need to track every cost and every journey to justify the percentage.

Note: Once you choose a method for a vehicle, you must stick with it for the life of that vehicle. Most sole trader tradesmen find the mileage method simpler and often comparable in value.

Parking and tolls

Parking charges and toll fees for business journeys can be claimed on top of either method. Keep receipts.

Tools and equipment

Tools you buy purely for work are claimable. How depends on the cost:

• Small tools and consumables (drill bits, blades, fixings, safety equipment) - claim the full cost in the year you buy them under running costs
• Plant and machinery (power tools, ladders, generators, testing equipment) - claim via the Annual Investment Allowance (AIA), which lets you deduct the full cost in the year of purchase up to £1 million

If you buy a tool that lasts many years, HMRC technically treats it as a capital asset and expects it to be claimed through capital allowances rather than as an immediate expense. In practice, the AIA covers almost everything a sole trader tradesman would buy.

Materials and stock

Materials you buy for jobs are a direct business expense - pipe, cable, timber, fixings, paint. Claim the cost of materials actually used on jobs in that tax year.

If you hold stock at the end of the tax year, technically only the cost of stock sold (not still held) should be claimed that year. For small quantities the difference is negligible, but for large material stocks it is worth being accurate.

Phone and internet

If you use your mobile phone for both work and personal calls, you can claim the business proportion. A common approach is to review one month of usage and use that to set a reasonable business percentage (often 60-80% for tradesmen who use their phone heavily for quoting, customer calls, and ordering).

A dedicated business SIM or phone line is 100% claimable. Broadband at home can be claimed at the business proportion if you genuinely use it for admin, invoicing, and quotes.

Home office

If you do business admin from home - invoicing, quotes, records - you can claim a portion of your home running costs. HMRC offers two methods:

• Simplified flat rate: £10/month for 25-50 hours per month, £18/month for 51-100 hours, £26/month for over 100 hours of business use
• Actual costs: apportion rent or mortgage interest, council tax, utilities, and broadband by the fraction of your home used and the fraction of time it is used for business

The flat rate is simple and avoids any capital gains implications when you sell your home. For most tradesmen who do light admin at home, the flat rate is the easiest option.

Clothing and PPE

Protective clothing and safety equipment required for your trade is fully claimable - work boots, hi-vis vests, safety helmets, gloves, overalls. The test is whether the item could only realistically be worn for work.

Everyday clothing that could double as casual wear - even if you only wear it for work - is not claimable. HMRC consistently rejects these claims.

Insurance

Business insurance premiums are fully deductible:

• Public liability insurance
• Employers liability (if you have staff or subcontractors)
• Professional indemnity insurance
• Tools and equipment insurance
• Van or commercial vehicle insurance (under the actual costs method)

Personal life insurance and income protection are generally not claimable as business expenses - they are personal financial products.

Training and professional development

Training costs are allowable if the course updates or improves skills you already use in your trade. A plumber doing a refresher on gas safety regulations, an electrician taking an 18th edition update - these are clearly linked to existing skills.

Training that takes you into a new trade or profession (a plumber studying for a surveying qualification) is not allowable - HMRC treats that as a capital expense in your personal development, not a business running cost.

Accountant and professional fees

Fees paid to an accountant, bookkeeper, or tax agent to prepare your Self Assessment return are fully claimable. Fees for other professional services used in the course of your business (legal advice on a contract, for example) are also allowable.

Fines and penalties are not allowable - HMRC will never let you claim a tax penalty as a business expense.

Subcontractors

If you pay subcontractors for work on your jobs, these payments are a business expense. Under CIS (Construction Industry Scheme), you may need to deduct tax from payments to subcontractors before passing it on to HMRC. Keep records of all subcontractor payments and CIS deductions.

What you cannot claim

Common claims that HMRC will reject:

• The cost of commuting from home to a regular fixed workplace
• Food and drink (unless travelling away from home on an overnight business trip)
• Personal clothing, even if you only wear it for work
• Entertainment of clients (business entertainment is specifically disallowed)
• Personal mobile phone costs beyond the business proportion
• Private medical insurance
• Fines or penalties

How to claim on Self Assessment

Expenses are entered on the SA103S (short) or SA103F (full) self-employment supplementary pages of your Self Assessment return. Most expenses go into the relevant box under "Allowable business expenses" - HMRC groups them into categories: cost of sales, motor expenses, travel, subcontractor costs, office costs, and so on.

Add up all expenses in each category for the year and enter the totals. The system then subtracts these from your income to calculate taxable profit.

To see how your expenses affect your overall tax bill, use the self-employed tax calculator.

Frequently asked questions

What expenses can I claim as a sole trader?

Any expense that is wholly and exclusively for business. For sole trader tradesmen, this typically includes: vehicle running costs (mileage rate or actual), tools and equipment, materials, phone and internet (business proportion), home office, clothing and PPE, insurance, trade training, subcontractor costs, and accountant fees.

Can a sole trader claim food and drink?

Only in limited circumstances. If you are travelling away from home on a business trip that requires an overnight stay, you can claim reasonable subsistence costs. Day-to-day meals and drinks are not claimable - HMRC treats food as a personal cost regardless of whether you are working that day.

Can I claim my van as a sole trader?

Yes. You can either claim the actual running costs multiplied by your business-use percentage, or use the HMRC mileage rate (55p per mile for the first 10,000 business miles in 2026/27, 25p above that). The mileage method is simpler for most tradesmen and covers all running costs including fuel, insurance, and servicing.

Do I need receipts for all my expenses?

You do not need a receipt for every small purchase, but you should keep reasonable records - bank statements showing payments, invoices for larger items, and a mileage log if you use the mileage method for your vehicle. HMRC can ask for records for up to 5 years after the relevant tax year, so keep documents organised.

What is the Annual Investment Allowance?

The Annual Investment Allowance (AIA) lets you deduct the full cost of plant and machinery (tools, equipment, machinery) in the year you buy it, rather than spreading the cost over several years. The annual limit is £1 million, which covers anything a typical sole trader would purchase. Claim it on your Self Assessment return in the capital allowances section.

Can a sole trader claim for a home office?

Yes, if you genuinely use part of your home for business admin. HMRC offers a flat rate of £10-£26 per month depending on hours worked from home, or you can claim a proportion of actual home costs. The flat rate is the simplest option for most tradesmen doing light admin from home.