Allowable Expenses Self-Employed: UK 2026 List and Rules

Quick answer: Allowable expenses for the self-employed are business running costs you deduct from income to reduce taxable profit: office costs, travel, uniforms, staff, stock, insurance and bank charges, premises, advertising, subscriptions and training. You can use simplified expenses flat rates for vehicles and home working, or the £1,000 trading allowance instead, but not both.

Every pound of allowable expense you claim reduces the profit you pay Income Tax and National Insurance on. For a basic-rate sole trader that is a 26% saving on each pound, so missing expenses is expensive. This guide sets out what counts as an allowable expense for the self-employed in the UK in 2026, the simplified expenses flat rates for 2026 to 2027, what you cannot claim, and a worked example. It pairs well with good records: issue numbered invoices with our invoice generator and keep every receipt.

Important: This is general information as of 2026, not tax advice. The rules here apply to sole traders and partners; limited companies follow Corporation Tax rules. Check GOV.UK or a qualified adviser for your situation.

What makes an expense allowable

An expense is allowable if it is incurred for the purposes of your business. If something is partly personal, you can only claim the business part. GOV.UK gives a clear example: if your £200 phone bill includes £130 of personal calls, you can claim only £70. The official page on expenses if you are self-employed is the starting point.

GOV.UK also gives a simple illustration of the effect: turnover of £40,000 and £10,000 of allowable expenses means you pay Income Tax on £30,000 of taxable profit, not £40,000.

The HMRC list of allowable expenses

GOV.UK groups allowable expenses into these categories. The examples column shows typical claims for small businesses.

Category	Examples you can usually claim
Office costs	Stationery, printer ink, postage, business phone and broadband share, software subscriptions
Travel	Fuel, parking, train and bus fares, hotel stays on business trips (or simplified mileage)
Clothing	Uniforms, protective clothing, costumes for performers
Staff costs	Salaries, employer NI, subcontractor fees
Stock and materials	Goods for resale, raw materials, materials used on jobs
Financial costs	Business insurance, bank charges, card fees, interest on business loans
Premises	Rent, business rates, heating, lighting, water for business premises
Advertising and marketing	Website costs, hosting, online ads, flyers
Subscriptions	Trade or professional journals and bodies
Training	Courses that update skills you already use in the business

Accountancy fees for preparing your business accounts are also commonly claimed. If you rebill costs to clients, such as materials or travel, see our guide to reimbursable expenses on an invoice so you do not double count them.

Typical allowable expenses by trade

Trade	Typical allowable expenses
Tradespeople and builders	Materials, tools, van mileage, protective clothing, public liability insurance, skip hire
Freelance designers and writers	Software subscriptions, laptop (cash basis), home office, website hosting, professional memberships
Cleaners and gardeners	Cleaning products, equipment, fuel or mileage, uniforms, insurance
Tutors and coaches	Teaching materials, travel to clients, video call software, training courses
Online sellers	Stock, packaging, postage, platform and payment fees, advertising

Whatever your trade, the test is the same: was the cost incurred for the business, and can you show it with a receipt or record? If a cost is unusual for your type of work, add a short note to your records explaining why the business needed it. That note takes seconds to write and can save a long conversation if HMRC ever checks your return. When in doubt about a large or unusual item, ask an accountant before you claim it rather than after.

Simplified expenses: flat rates for 2026 to 2027

Simplified expenses let you use HMRC flat rates instead of calculating actual costs for three areas. GOV.UK says you do not have to use them, and they cannot be used by limited companies or partnerships involving a limited company.

Vehicles

Vehicle	Rate per business mile (2026 to 2027)
Cars and goods vehicles, first 10,000 miles	55p (45p before 6 April 2026)
Cars and goods vehicles, after 10,000 miles	25p
Motorcycles	24p

The flat rate covers running costs such as fuel, insurance, servicing and repairs, so you cannot claim those as well. GOV.UK's own example: 11,000 business miles in 2026 to 2027 gives 10,000 x 55p plus 1,000 x 25p = £5,750. The official simplified expenses rates for vehicles page has the details. Keep a log of every business journey; our mileage log template makes that easy.

Working from home

Business hours worked at home per month	Flat rate per month
25 to 50	£10
51 to 100	£18
101 or more	£26

This covers heating and electricity. Phone and broadband are claimed separately on actual business use. If your actual business share of household costs is higher, you can calculate it instead.

Living at your business premises

For businesses such as small guesthouses where you live on site, you deduct a flat amount from your total premises costs for private use: £350 a month for 1 person, £500 for 2 and £650 for 3 or more.

Trading allowance vs claiming expenses

The £1,000 trading allowance is a simple alternative. GOV.UK says that if you use it, you cannot claim any other expenses or allowances. That makes the choice a straightforward comparison:

• Expenses under £1,000: the trading allowance usually gives a bigger deduction and less paperwork.
• Expenses over £1,000: claiming actual expenses gives a bigger deduction.
• Making a loss: claim actual expenses, because the allowance cannot create a loss.

You can choose each year, so a side business with few costs might use the allowance in a quiet year and switch to actual expenses in a year when it buys equipment or materials. Add up both figures before you file and pick the larger deduction.

If your gross trading income is £1,000 or less, you may not need to register at all. Above that, see how to register as self-employed in the UK.

Worked example: a sole trader's expense claim

Leah is a self-employed decorator in England with £48,000 turnover in 2026 to 2027. She uses the cash basis and simplified expenses for her van and home office.

Expense	Calculation	Claim
Paint and materials	Receipts	£6,200
Software and apps	12 x £40	£480
Phone	£600 x 40% business	£240
Public liability insurance	Annual premium	£360
Training course	Refresher on spray finishing	£300
Accountant	Accounts fee	£600
Van mileage	4,000 miles x 55p	£2,200
Working from home	12 months x £26	£312
Total allowable expenses		£10,692

Her taxable profit is £48,000 minus £10,692 = £37,308. Because all of her expenses fall within the basic rate band, each pound saves 20% Income Tax plus 6% Class 4 NI. The saving is £10,692 x 26% = £2,779.92. Had she used the £1,000 trading allowance instead, she would have saved only £1,000 x 26% = £260, so claiming actual expenses is worth £2,519.92 more.

How to split mixed-use costs

Many costs are used for both business and personal life: a phone, broadband, a car, a room at home. HMRC allows the business proportion, provided you can explain how you worked it out. Common methods include:

• Phone: review an itemised bill and calculate the business share of calls and data, as in GOV.UK's £200 bill with £70 of business use.
• Broadband: estimate business use as a share of total use, or claim in full if the line is solely for the business.
• Vehicle: keep a log of business and personal miles. If you do not use the flat mileage rate, claim actual running costs multiplied by the business percentage.
• Home office: divide costs by the number of rooms used, then by the share of time the room is used for business, or use the flat monthly rate.

Worked example: actual vehicle costs vs the flat rate

Suppose a sole trader drove 12,000 miles in a year, of which 7,200 were business miles. That is 7,200 divided by 12,000 = 60% business use. If fuel, insurance, servicing and repairs came to £4,000, the allowable claim on actual costs is £4,000 x 60% = £2,400. On the simplified basis for 2026 to 2027, 7,200 miles x 55p = £3,960. Here the flat rate gives £1,560 more, which is why it is worth comparing both before you commit to a method for that vehicle.

Capital items: cash basis vs traditional accounting

For equipment you buy and keep, such as tools, laptops or machinery, the method matters. GOV.UK says:

• Cash basis: claim most equipment as an allowable expense in the year you pay. Cars are the exception and go through capital allowances.
• Traditional accounting: claim capital allowances on equipment, machinery and business vehicles such as cars, vans, lorries and bicycles.

The cash basis is now the default for most sole traders. Our explainer on how to calculate depreciation helps if you use traditional accounting for your own management figures.

What you cannot claim

• Money you take out of the business for personal use (drawings).
• The personal share of anything used privately.
• Everyday clothing, even if you wear it only for work, unless it is a uniform or protective clothing.
• Client entertaining and hospitality.
• Fines and penalties, such as parking tickets.
• Your own Income Tax and National Insurance.
• Costs of a limited company, which follow Corporation Tax rules (see Corporation Tax in the UK).

How to claim allowable expenses step by step

1. Separate business spending into its own account so expenses are easy to identify.
2. Capture every receipt as it happens, photographed or digital. Our expense report template works well for a monthly summary.
3. Categorise each cost using the HMRC categories above. Our post on how to track business expenses has a simple system.
4. Decide on simplified expenses for your vehicle and home office, and apply the 2026 to 2027 rates.
5. Compare with the £1,000 trading allowance and choose the bigger deduction.
6. Enter the totals on your Self Assessment return. If turnover is low, you may be able to give a single total figure. See our Self Assessment tax return guide.
7. Keep records for at least 5 years after the 31 January deadline for that year.

Lower profit also means lower payments on account for the next year. If you are in Making Tax Digital (mandatory since 6 April 2026 for qualifying income over £50,000), you record expenses digitally and include them in quarterly updates; our Making Tax Digital guide explains how.

Construction subcontractors

If you work under CIS, claiming allowable expenses is often how you get a refund of the 20% deducted from your labour. Our CIS invoice template guide explains how to separate labour and materials on invoices.

Claim every expense, invoice every job

Allowable expenses for the self-employed cover far more than most people claim: materials, travel at 55p a mile, home working, insurance, phone, software and training all reduce your tax bill. Keep receipts, use simplified expenses where they help, and compare against the trading allowance each year. Good records start with good invoices: create yours free with our invoice generator or the UK invoice generator. When your invoice looks right, download it as a PDF and send it straight to your client.