Self employed business expenses

Spending on your business can reduce the profit HMRC taxes, but only when a cost passes HMRC’s rules. This guide explains which self employed business expenses count for 2026/27, which don’t, and how to handle shared costs such as your phone, car and home office.

What Counts as Self Employed Business Expenses?

As a sole trader or partner, you pay Income Tax and National Insurance on profit, not on everything you invoice. Profit is your income minus the costs HMRC accepts, which GOV.UK calls allowable expenses. You’ll also see them called sole trader expenses, tax-deductible business costs or simply business expenses for tax purposes.

A cost usually qualifies when it keeps the business running: stock, tools, a client visit, software or van insurance. Drawings, the money you take for yourself, are never deductible.

For how the totals go onto your return, see our guide to claiming allowable expenses on your Self Assessment tax return.

The “Wholly and Exclusively” Test, With Examples

Every claim starts with one question: why did you pay for this? A purely business reason normally passes. Where part of the reason was personal, only a clearly identifiable business part can be claimed.

• Passes: a plumber’s pipe fittings, a photographer’s lens repair, a salon’s booking software.
• Partly passes: a phone used for work and family calls, where only the business share counts.
• Fails: a smart suit for meetings. It feels like a work cost, but everyday clothing also serves a personal purpose.

Self Employed Business Expenses List: 10 Categories HMRC Accepts

GOV.UK sorts self employed business expenses into broad headings. Check your receipts against these examples.

GOV.UK’s training guidance also covers new skills that support your current business; check it if a course points to different work.

What You Can’t Claim

• Travel between home and your regular place of work, and fines or penalty charges such as parking tickets.
• Everyday clothing, even when you wear it only for work.
• Money drawn for yourself, and the private share of anything you also use at home.
• Most gifts. Under HMRC’s marketing, entertainment and subscriptions rules, a promotional gift generally needs to carry your business name or logo, and the total for any one person can’t go over £50 in a tax year. Food, drink and tobacco are excluded. HMRC’s business manual lists other exclusions, such as some vouchers, so check before you claim.

Food, Travel and Client Entertaining

• Your normal daily meals: not deductible, even on a busy working day.
• Travel and subsistence: fares, fuel and parking for business journeys can qualify. GOV.UK confirms that accommodation and food on overnight business trips are allowable. Reasonable meals on other qualifying business journeys may also count, depending on the trip.
• Client entertaining: generally disallowed, even if business is discussed over the meal. Staff events where employees are the main guests are the exception.

Our guide to business travel and subsistence expenses covers these rules in more depth.

Mixed-Use Costs: Splitting Business and Personal

Many self-employed expenses are shared with home life. HMRC accepts a claim for the business part when you use a reasonable, supportable method based on actual business use.

1. Choose a measure that reflects real use: a mileage log, a work diary, rooms used or data usage.
2. Test it over a typical period rather than estimating.
3. Apply the result to the yearly cost. For example, if a fair review shows 40% business use of a £600 phone contract, the claim is £240. The 40% is just an example; HMRC has no set percentage.
4. Keep notes of the method and the evidence behind it.

On unlimited plans, itemised calls may not show real use, so a usage log or a separate work line is stronger evidence.

Vehicles and Mileage: Actual Costs or the 55p Rate

For a car or van, you either claim the business share of actual running costs (fuel, insurance, servicing, repairs) or use simplified expenses for vehicles, a flat rate per business mile. Mileage is often the largest of all self employed business expenses for trades and mobile services.

• The 10,000-mile point counts business miles in each vehicle across the tax year, so the 25p rate starts at mile 10,001.
• The flat rate replaces fuel, insurance and repairs for that vehicle. Never claim both. Once you use flat rates for a vehicle, you must keep doing so while it’s used in the business.
• GOV.UK confirms parking can be added on top. Treat tolls the same way only once you’ve confirmed the journey was for business.
• Flat rates aren’t available for a vehicle you’ve already claimed capital allowances on, or for vehicles built for commercial passenger use such as black cabs.

Working From Home: Flat Rate or Actual Costs

Work from home 25 hours or more a month and the working-from-home flat rate covers household running costs without any calculation: £10 a month for 25–50 hours, £18 for 51–100 hours and £26 for 101 hours or more. Phone and internet aren’t included, so claim their business share separately.

The other route is a share of actual household bills, based on the rooms and hours you use for work. It can give a higher figure but needs more evidence.

Equipment, Cars and Cash Basis

Most sole traders now use cash basis as their default method. Under it, qualifying equipment and other business costs are normally deducted when you pay for them, within the relevant rules. Cars are the main exception: a business car usually goes through capital allowances rather than being deducted as an ordinary cost. If you use the flat mileage rate for a vehicle, you can’t also claim the running costs it covers.

Traditional (accruals) accounting has separate rules for capital purchases. There, qualifying plant and machinery is usually relieved through capital allowances, including the Annual Investment Allowance of up to £1 million.

Worked Examples of Self Employed Business Expenses

These illustrative cases show how self employed business expenses work under 2026/27 rules.

Actual Expenses or the £1,000 Trading Allowance?

The trading allowance is an alternative to deducting your self employed business expenses from qualifying trading income. You generally can’t use both against the same income, and claiming the allowance also rules out capital allowances.

It isn’t open to everyone. For example, it can’t be used for income from a company or partnership you or a connected person control, or from your own or your partner’s employer. It also can’t be used to create a loss. If your costs are higher than your income, claiming actual expenses on a return is usually the only way to record that loss.

• Income £3,000 with £400 of costs: the allowance leaves £2,000 taxable, against £2,600 using actual costs.
• Income £3,000 with £1,500 of costs: actual costs leave £1,500 taxable, against £2,000 with the allowance.

Trading income above £1,000 usually means you need to register as self-employed with HMRC.

Records and Making Tax Digital

Keep receipts, invoices, bank statements and mileage logs for at least 5 years after the 31 January deadline for the tax year. If HMRC is checking a return, or you’ve amended or filed one late, it’s sensible to keep the relevant records until the matter is fully closed. Good records are what make self employed business expenses stand up if HMRC asks. Digital copies are accepted. For small purchases, see do you need all receipts for a tax return.

Under Making Tax Digital for Income Tax, you must keep digital records and send quarterly updates once your qualifying income passes these thresholds:

Qualifying income is your combined self-employment and property turnover before expenses, not your profit. Employment income doesn’t count.

Common Mistakes With Business Expenses

Most problems with allowable business expenses come from a few habits.

Self Employed Business Expenses FAQs

What can I claim as self employed?

Costs paid wholly and exclusively for the business, such as stock, tools, business travel, insurance, marketing, subscriptions and relevant training, plus the business share of phone, internet and home costs.

Can I claim self employed business expenses and the trading allowance together?

Generally not against the same income. You compare the £1,000 allowance with your actual allowable costs, if you’re eligible for the allowance, and use one.

What is the self-employed mileage rate for 2026/27?

For cars and vans, 55p a mile for the first 10,000 business miles in the tax year and 25p after that. Motorcycles are 24p.

Can I claim my phone bill?

Yes, the business share, worked out with a reasonable method you can support with records.

Can I claim food when I’m self-employed?

Not your normal daily meals. Food on overnight business trips can be claimed, and reasonable meals on other qualifying business journeys may also count. Client meals are generally not allowed.

Can I claim clothes for work?

Only uniforms, protective gear and costumes. Everyday clothing isn’t allowed.

How long should I keep expense receipts?

At least 5 years after the 31 January deadline for that tax year, and longer if HMRC is checking the return.

Final Verdict: Self Employed Business Expenses

Self employed business expenses reduce your tax only when they meet the wholly and exclusively test. Claim the business share of mixed costs, use the 55p mileage rate correctly from April 2026, compare your costs with the £1,000 allowance and keep clear records for at least five years.