Expenses if you’re self-employed:
what you can claim

You’re working for yourself and you want to pay tax on your real profit, not your takings. That means claiming every cost you’re entitled to, and only those. Here’s what counts, and two shortcuts that can save you time.

What counts as an allowable expense

You pay tax on your turnover less your allowable expenses. If your turnover is £40,000 and you claim £10,000 of expenses, you pay Income Tax and National Insurance on £30,000.

Costs you can usually claim include:

• office costs, like stationery and your phone bill
• travel for work, like fuel, parking and train fares, but not your normal commute
• uniforms and protective clothing
• staff wages and subcontractors
• stock and raw materials
• insurance and bank charges
• business premises, like rent, rates, heating and lighting
• advertising, marketing and your website
• trade or professional subscriptions
• training that keeps your existing skills up to date

What doesn’t count

Money you take out for yourself isn’t an expense. If something is used partly for business and partly privately, like your car or mobile, you can only claim the business share.

Equipment, machinery and vans you keep and use in the business are usually claimed through capital allowances rather than as an everyday expense.

The £1,000 trading allowance

The trading allowance gives you up to £1,000 a year of trading income tax-free.

• If your trading income is £1,000 or less in the tax year, before expenses, you may not need to tell HMRC at all.
• If it’s more than £1,000, you can deduct the £1,000 allowance instead of your actual expenses. That only helps if your real costs are under £1,000.

You can’t claim the allowance and your expenses against the same income. You also can’t use it for income from a company you or a close family member owns, a partnership you’re in, or your employer.

You may still want to register if your income is under £1,000, for example to claim a loss or pay voluntary National Insurance.

Simplified expenses

Sole traders and partnerships with no company partners can use flat rates instead of working out actual costs for some expenses.

Vehicles. For 2026/27 you can claim per business mile:

Vehicle	Rate per business mile
Cars and goods vehicles, first 10,000 miles	55p
Cars and goods vehicles, after 10,000 miles	25p
Motorcycles	24p

Once you use the flat rate for a vehicle, you keep using it for as long as you use that vehicle in the business. You can’t use it for a vehicle you’ve already claimed capital allowances on.

Working from home. If you work at home for 25 hours or more a month:

Hours a month at home	Flat rate a month
25 to 50	£10
51 to 100	£18
101 or more	£26

The flat rate doesn’t cover your phone or internet. Work out the business share of those separately.

There’s also a flat rate if you live at your business premises, such as a guest house.

Cash basis

Cash basis is now the standard way for sole traders and most partnerships to work out profit: you record income when you’re paid and costs when you pay them, so you don’t pay tax on money you haven’t received. You can choose traditional accounting instead, where you record income and costs when you invoice or are billed. You say which one you’ve used on your return.

What you need to do

• Keep a receipt or invoice for every cost you claim.
• Separate business and personal spending, ideally with a separate bank account.
• Keep a mileage log with dates, destinations and business reasons.
• Note the hours you work from home each month if you’ll use the flat rate.
• Compare your real costs with the £1,000 trading allowance before you file.
• Decide whether simplified expenses or actual costs suit each vehicle before your first claim.

Key dates

• 5 April: the end of the tax year your expenses belong to.
• 5 October: register for Self Assessment if you started trading in the last tax year.
• 31 January: your return and payment are due.