Sole Trader Allowable Expenses: What You Can Claim

Allowable expenses are business costs a sole trader can deduct when working out taxable profit. They reduce profit, not tax pound-for-pound. The central question is whether the cost is genuinely for the business; personal drawings and personal spending are not allowable expenses.

Common sole trader expenses

• Office costs, phone, software and business internet use.
• Business travel, subject to the rules for vehicles and journeys.
• Advertising, website costs, relevant insurance and bank charges.
• Stock, materials, subcontractors and qualifying training.

What if a cost is partly personal?

Only the business proportion can normally be claimed. Keep a reasonable record of how you worked that proportion out, particularly for a home office, mobile phone or vehicle. Do not use a rough percentage without evidence that it reflects business use.

Trading allowance versus expenses

The £1,000 trading allowance can be an alternative to deducting actual expenses. You cannot claim both for the same income. Compare the allowance with your real allowable costs before completing the return, and keep records even if the allowance is likely to be used.