What can a sole trader claim as a business expense?

The short answer: As a sole trader, you take allowable business costs off your income to work out your taxable profit. In 2026/27 you can claim 55p a mile for the first 10,000 business miles, then 25p. From 6 April 2027 the higher band rises to 35p, and the trading allowance goes from £1,000 to £3,000.

"Can I put it through the business?" is a fair question. The useful follow-up is: what was it for, and how much of it was genuinely for work?

What can a sole trader claim as a business expense?

You can claim the running costs of your business, as long as they're for the business. Expenses don't come back to you as a refund. They lower the profit you pay tax on, so they cut the tax you need to set aside.

HMRC gives a simple example. If your turnover is £40,000 and you claim £10,000 in allowable expenses, you only pay Income Tax on the remaining £30,000.

Common costs you can claim include:

• office costs, such as stationery and phone bills

• travel, such as fuel, parking and train fares

• stock and raw materials you buy to sell on

• business insurance and bank charges

• advertising and website costs

• trade or professional subscriptions

• training linked to your business

If something is partly personal, you can only claim the business share. HMRC's example is a £200 phone bill where £70 is business calls: you can claim £70.

There's also the trading allowance, a flat amount you can take off instead of your actual costs. You can't use both at once, so we compare them further down.

Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

Keep evidence of what you bought, why it was for the business and how you worked out any split. You must keep your records for at least 5 years after the 31 January deadline for that tax year.

Is the 55p mileage rate permanent?

Yes. In 2026/27 the flat rate for cars and vans is 55p a mile for your first 10,000 business miles. The government first brought it in as a temporary rate, and the Autumn Budget 2026 made it permanent.

So if you've seen 45p a mile, that's out of date. 45p was the rate before 6 April 2026. For 2026/27, the HMRC flat rates are:

• cars and goods vehicles (such as vans): 55p a mile for the first 10,000 miles

• cars and goods vehicles: 25p a mile after that

• motorcycles: 24p a mile

These flat rates are part of "simplified expenses". You use them instead of the actual costs of buying and running your vehicle, such as insurance, repairs, servicing and fuel. So you don't claim fuel on top.

What is the mileage rate over 10,000 miles from April 2027?

It goes up from 25p to 35p a mile from 6 April 2027. The Budget's tax overview says this applies to self-employed simplified mileage rates as well as to employees. The government says it will make the change through new regulations before the 2027/28 tax year.

The table assumes you use simplified expenses for that vehicle. Motorcycles are 24p a mile in 2026/27. The 2027/28 figures come from the Budget and still need the new regulations.

A few rules still apply, whichever year it is:

1. You can't use the flat rate for a vehicle you've already claimed capital allowances for, or included as an expense.

2. Once you use the flat rate for a vehicle, you must keep using it while you use that vehicle for work.

3. You can still claim parking and other travel, such as train journeys, on top.

4. Keep a record of your business miles. We'd note the date, where you went and why, because you need records you can show HMRC if asked.

Example: 15,000 business miles

These figures are made up, to show how the change works.

Sam is a self-employed electrician who drives 15,000 business miles a year.

• 2026/27: 10,000 x 55p = £5,500, plus 5,000 x 25p = £1,250. Total: £6,750.

• 2027/28: 10,000 x 55p = £5,500, plus 5,000 x 35p = £1,750. Total: £7,250.

That's £500 more in expenses for the same driving. The Budget says someone driving 15,000 business miles could get up to £300 in extra tax savings from both rises, compared with the old 45p and 25p rates.

Which travel costs can I claim?

Business journeys count. Travel between home and work, and non-business driving, don't. Fines and penalty charges can't be claimed either.

You can claim things like train, bus and taxi fares, hotel rooms and meals on overnight business trips. Your everyday lunch isn't a business expense, though. Sadly, neither is the coffee that got you through the morning.

Can I claim the trading allowance and expenses?

No, not against the same trading income. You choose one or the other. If you use the trading allowance, you can't deduct any other expenses or allowances.

The trading allowance is a tax-free amount for small amounts of self-employed or casual income. In 2026/27 it's up to £1,000 a year. From 6 April 2027 it rises to £3,000, as confirmed in the Budget. The threshold for reporting trading income through Self Assessment goes up to £3,000 at the same time. Both changes still need to pass through the Finance Bill.

Some things to know before you choose:

• The allowance can't create a loss. You can only deduct up to the amount of your income.

• If your costs are higher than the allowance, claiming expenses may work out better.

• It doesn't apply to partnership income, or to income from your employer or a company you or someone connected to you controls.

• You still need to keep a record of your income.

The table assumes the income is from your own trade, not a partnership.

Example: a side business

These figures are made up.

Priya sells prints online. In 2027/28 she earns £2,400 and spends £300 on paper and postage.

• Trading allowance: £2,400 is under £3,000, so the allowance covers it all. The Budget says people in this position won't have to declare or pay tax on that income.

• Actual expenses: £2,400 minus £300 leaves £2,100 of taxable profit.

Now say her costs were £2,800 on £3,500 of sales. Expenses leave £700 of profit. The allowance would leave £500. So the allowance still wins, just. At £3,200 of costs, expenses would win. That's why it's worth running the numbers both ways each year. If you're starting out, our guide to registering as a sole trader explains when you need to tell HMRC.

What can I claim for working from home?

You can claim a fair business share of your household bills, or use a flat monthly rate. Under simplified expenses, the flat rate depends on your hours:

The flat rate doesn't cover phone or internet bills. You can work out the business share of those separately. You need at least 25 hours a month at home to use it.

If you use actual costs instead, you can claim a share of things like heating, electricity, Council Tax and mortgage interest or rent. HMRC lists mortgage interest, not the repayments. Use a reasonable method, such as the number of rooms you use or the time you spend working there.

Using part of your home only for business can affect Private Residence Relief when you sell. An occasional office doesn't count as only for business, so check the rules before you set aside a room.

Do equipment and training count as expenses?

Often, yes. How you claim equipment depends on how you keep your books.

Cash basis is now the standard way for sole traders to keep their books. Under cash basis, equipment such as computers or printers is an allowable expense. Under traditional accounting, you claim capital allowances instead. Our money glossary explains both terms.

If you use traditional accounting, the Budget also changes the main rate of writing down allowance. That's the yearly share of a cost you can claim. It falls to 12% from 6 April 2027 for Income Tax.

Training can count too. You can claim courses that build new skills to support your business, including admin skills or changes in your industry. Courses to start a new business, or to move into an unrelated field, can't be claimed.

Which costs can't I claim?

These usually aren't allowable:

• entertaining clients, suppliers or customers

• everyday clothing, even if you only wear it for work

• fines for breaking the law

• money you take out of the business for yourself

Your personal pension contributions aren't a business expense either. They get tax relief through your pension instead, so they don't lower your trading profit.

Capital at risk. The value of your pension can go down as well as up, and you may get back less than you pay in.

When something is unclear, write down the facts and check the right category. That's safer than deciding that anything useful to your working life must count.

Still got questions?

Can I claim 45p per mile as a self-employed person? Not for 2026/27. The rate for cars and vans is 55p for the first 10,000 business miles and 25p after that. 45p was the rate before 6 April 2026.

What proof do I need to claim mileage? You need records that back up your claim, in case HMRC asks to see them. A simple log of each business journey (date, where, why and how far) does the job.

Can I use the 55p rate and claim fuel? No. The flat rate covers the cost of buying and running the vehicle, including fuel. You can still add parking.

Do I need to register for Self Assessment if I earn under £1,000? Usually not in 2026/27, unless you want to, for example, claim a loss or pay voluntary Class 2. From 6 April 2027 the reporting threshold rises to £3,000.

Can I claim the cost of doing my tax return? No. The cost of preparing and sending your Self Assessment return isn't an allowable expense, but other accountancy fees for the business can be.