The Complete HMRC Expense Categories Guide for UK Self Employed (2026/27)

One of the most effective ways to reduce your tax bill as a self-employed person is to claim every allowable business expense. Yet many sole traders either miss legitimate expenses entirely or claim things HMRC would not accept, both of which cost you money.

This guide covers every HMRC expense category, what you can claim, what you cannot, and how to record each one correctly.

What makes an expense allowable?

HMRC's golden rule is simple: an expense must be "wholly and exclusively" for business purposes to be allowable. If something has a personal element, even partly, it generally cannot be claimed in full, though there are exceptions where a reasonable business proportion can be calculated.

Allowable expenses reduce your taxable profit. If your income is £40,000 and you have £8,000 in allowable expenses, you only pay tax on £32,000 at the basic rate, which saves you £1,600 in income tax, plus a further reduction in Class 4 National Insurance. Most UK sole traders miss at least 3 allowable expense categories every year. No account needed, start recording your expenses. Download your recorded expenses for free today.

HMRC's expense categories

1. Office costs

What you can claim:

• Stationery, printer ink and paper
• Postage and packaging
• Computer equipment (see capital allowances below)
• Software subscriptions used for work
• Phone bills, the business-use proportion only
• Broadband, the business-use proportion only

What you cannot claim:

• Personal phone calls or personal internet use
• Equipment bought for personal use

The home working overlaps. If you work from home, you can claim a proportion of your household bills. HMRC offers a simplified flat rate:

• 25–50 hours per month: £10
• 51–100 hours per month: £18
• 101+ hours per month: £26

Alternatively, you can calculate the actual business proportion of your bills, which is more complex but often more generous.

2. Travel costs

What you can claim:

• Mileage at HMRC-approved rates, 45p per mile for the first 10,000 miles, 25p after
• Public transport, train, bus, and taxi fares for business journeys
• Parking costs for business trips
• Congestion charges and tolls for business travel
• Accommodation and subsistence for overnight business trips
• Subsistence, meals on business trips away from your normal place of work

What you cannot claim:

• Commuting, travel between your home and a permanent place of work
• Personal travel
• Fines, speeding tickets or parking penalties

The mileage rate is important. If you use your personal vehicle for business, the mileage rate covers fuel, oil, tyres, servicing, insurance and depreciation. You cannot claim these separately if you use the mileage rate. Keep a mileage log with, date, destination, purpose, and miles travelled for every business journey.

3. Clothing

What you can claim:

• Uniforms or protective clothing required for your work
• Costumes for performers

What you cannot claim:

• Every day clothing, even if you only wear it for work
• Clothing that could be worn outside of work, such as suits, smart shoes, and general workwear

This is one of the most commonly rejected expense claims. HMRC is very strict; clothing must be a uniform or protective gear specifically required for the job.

4. Staff costs

What you can claim:

• Wages and salaries for employees
• Employer National Insurance contributions
• Pension contributions for employees
• Staff training costs directly related to their role
• Subcontractor costs for work they do for your business

What you cannot claim:

• Your own wages or drawings, as a sole trader, you cannot pay yourself a salary as an expense
• Personal pension contributions, these are handled differently through tax relief

5. Resale goods and raw materials

What you can claim:

• Stock purchased for resale
• Raw materials used in products you make and sell
• Direct costs of producing goods

What you cannot claim:

• Materials or stock purchased for personal use
• Items bought speculatively that you have not sold

6. Financial costs

What you can claim:

• Bank charges and account fees on business accounts
• Interest on business loans
• Hire purchase interest on business equipment
• Insurance premiums for business insurance, professional indemnity, public liability, and business contents

What you cannot claim:

• Personal loan interest
• Personal bank account fees
• Fines or penalties from financial institutions
• Life insurance

7. Premises costs

What you can claim:

• Rent for business premises
• Business rates
• Water, gas and electricity for business premises
• Security costs for business premises
• Cleaning and maintenance of business premises

What you cannot claim:

• Mortgage repayments on your home, though you can claim mortgage interest as a proportion if you work from home
• Costs of buying business premises, these are capital expenditure

8. Advertising and marketing

What you can claim:

• Website design, hosting and domain costs
• Online advertising, Google Ads, social media advertising
• Print advertising
• Business cards and promotional materials
• Networking event fees
• Samples given to potential customers

What you cannot claim:

• Entertainment costs, client dinners, hospitality, gifts over £50 per person per year
• Sponsorship with no clear business purpose

Client entertainment is not allowable. This catches many sole traders out. Taking a client to dinner, buying rounds of drinks, or buying tickets to events are not allowable expenses regardless of business purpose. Gifts are allowable only if they cost less than £50 per person per year and carry a business logo.

9. Training costs

What you can claim:

• Courses, training and qualifications that update existing skills required for your current business
• Industry memberships and subscriptions directly related to your work
• Books and publications directly related to your trade

What you cannot claim:

• Training to enter a new profession or trade
• Qualifications that are not required for your current work
• General self-improvement courses

The distinction matters. A web developer attending a new JavaScript framework course can claim it. The same developer attending a photography course, even if they occasionally photograph clients, likely cannot, because it is not wholly and exclusively for their web development business.

10. Professional and legal fees

What you can claim:

• Accountant fees for preparing business accounts and tax returns
• Solicitor fees for business contracts
• Professional indemnity insurance
• Debt collection costs for business debts
• Professional membership fees required for your trade

What you cannot claim:

• Legal costs for buying property or other capital assets
• Fines or penalties
• Legal costs for personal matters

Your accountant's fee is itself an allowable expense, one of the few expenses that pays for itself directly.

11. Depreciation and capital allowances

You cannot claim the full cost of equipment as an expense in the year you buy it; instead, you claim capital allowances, which spread the cost over time.

Annual Investment Allowance (AIA). Most sole traders can claim 100% of the cost of qualifying plant and machinery in the year of purchase up to the AIA limit (currently £1 million, well above what most sole traders spend). This effectively allows you to deduct the full cost immediately.

What qualifies:

• Computers, laptops, tablets
• Tools and machinery
• Vehicles used for business (with restrictions for cars)
• Office furniture

What does not qualify:

• Land or buildings
• Cars, these use a separate writing-down allowance system

Keeping proper records

HMRC requires you to keep records of all income and expenses for at least 5 years after the 31 January Self Assessment deadline. For 2025/26 returns, that means keeping records until at least January 2032.

What to keep:

• Receipts for every expense
• Bank statements
• Invoices issued and received
• Mileage logs for vehicle use
• VAT records if VAT registered

Tracking expenses throughout the year, by HMRC category, means your Self Assessment return is straightforward, and you are less likely to miss legitimate claims.

Common mistakes to avoid

Mixing business and personal expenses. Keep a separate business bank account. It makes record-keeping clean and demonstrates to HMRC that your business finances are properly managed.

Missing small expenses: Postage stamps, parking meters, and small software subscriptions, these add up over a year. A £10 expense recorded every week is £520 off your taxable profit, saving over £100 in tax at the basic rate.

Not claiming home working costs. If you work from home at all, claim the flat rate at a minimum. Many sole traders skip this because they think it is too small to bother with, but it is not.

Claiming client entertainment. As covered above, client dinners and hospitality are not allowable. Do not include them.

Losing receipts, HMRC accepts digital copies of receipts. Photograph every receipt on the day and store it linked to the expense record.

Frequently Asked Questions

Can I claim expenses before my business officially started?
Yes, pre-trading expenses incurred in the seven years before you started trading can be claimed in your first tax return, as long as they would have been allowable if incurred after trading began.

What if an expense is partly personal and partly business?
You can claim the business proportion. For a phone used 70% for business, claim 70% of the bill. Document your calculation in case HMRC asks.

Do I need receipts for everything?
HMRC does not legally require a receipt for every expense, but you do need to be able to substantiate every claim. A bank statement entry alone is often not sufficient; a receipt or invoice is much stronger evidence.

Can I claim VAT on expenses?
Only if you are VAT registered. If you are, you reclaim input VAT on your VAT return; it does not go through your income tax expenses. If you are not VAT registered, the full VAT-inclusive amount is your allowable expense.

What happens if I claim something I should not?
HMRC can open an enquiry into your return and ask you to prove every expense claimed. Incorrect claims result in additional tax plus interest and potentially penalties. If you are unsure whether something is allowable, consult an accountant before claiming it.

This guide is for informational purposes only and does not constitute tax advice. HMRC rules change, always check the latest guidance at gov.uk/self-employed-expensesor consult a qualified accountant for advice specific to your circumstances.