Allowable Expenses for Sole Traders UK (HMRC Explained)

Quick answer

Allowable expenses for sole traders in the UK are costs that are “wholly and exclusively” for business use, according to HMRC.

These include things like software, travel, equipment, phone bills, working from home costs, and professional fees.

If you’re looking for a full breakdown, see:
Sole trader expenses list UK

What does “allowable expenses” mean?

HMRC defines allowable expenses as costs that are necessary for running your business and are not mainly for personal use.

To be allowable:

• The expense must be for your business
• You must have actually paid it
• You must keep records

If a cost is partly personal, you can only claim the business portion.

Common allowable expenses for sole traders

Typical allowable expenses include:

• Office and admin costs
• Equipment and tools
• Travel expenses
• Working from home costs
• Phone and internet
• Marketing and advertising
• Professional fees

Examples of allowable vs non-allowable

Allowable

• Business software subscriptions
• Travel to client meetings
• Accountant fees
• Work equipment

Not allowable

• Personal expenses
• Everyday clothing
• Non-business travel
• Client entertaining

Mixed-use expenses

If something is used for both business and personal use, you must split the cost.

Examples:

• Phone bills
• Internet
• Household bills

Only the business portion can be claimed.

HMRC guidance

For official rules, see:
https://www.gov.uk/expenses-if-youre-self-employed

How this relates to your tax return

Allowable expenses reduce your taxable profit.

Lower profit → less tax to pay.

This is why tracking expenses properly is important.

👉 Most sole traders use accounting software to track this automatically:
Best accounting software for sole traders

Final thoughts

Understanding allowable expenses is the foundation of managing your tax as a sole trader.