The HMRC test
HMRC's rule: an expense is allowable if it's "wholly and exclusively" for the purposes of your trade. That's stricter than "useful" or "I bought it for work" — it means the expense exists ONLY because of your business.
If something has both personal and business use, you usually claim the business proportion only (e.g. 40% of your phone bill if 40% of calls are work).
Commonly allowable
- Office costs: stationery, printer ink, postage, software subscriptions.
- Use of home as office: flat-rate £26/month if you work 101+ hours a month from home, or actual cost (mortgage interest, council tax, utilities) apportioned by rooms used and time used.
- Travel: business mileage at 45p/mile for first 10,000 miles (25p after) if using your own car. Train/bus/taxi fares for work meetings. NOT your commute to a regular workplace.
- Subsistence: reasonable meals when staying away from home overnight on business.
- Phone & internet: business proportion of bills.
- Professional fees: accountant, legal advice, professional body memberships related to your trade.
- Training: courses to update existing skills (NOT to acquire new ones unrelated to your current trade).
- Insurance: public liability, professional indemnity, contents insurance for business equipment.
- Marketing: website hosting, ads, business cards, paid social.
- Bank charges and interest on business accounts and business loans.
- Bad debts from invoices a customer didn't pay (with conditions).
Commonly rejected
- Commuting: from home to a regular workplace. (Travel between client sites is fine.)
- Entertainment: taking clients out to dinner is NOT allowable for sole traders, even if it directly leads to a sale.
- Clothing: normal everyday clothes, even if you only wear them for work. Branded uniforms and protective gear are allowable.
- Training in a new trade: if you're learning a brand-new skill unrelated to your existing business, HMRC may class it as capital, not allowable.
- Personal expenses with a business label: a gym membership "for stamina" is not allowable. A laptop you also use personally is split-claim only.
- Fines and penalties from HMRC, traffic, etc.
Keep records that survive an enquiry
HMRC can open an enquiry up to 4 years after you file (longer for careless or deliberate errors). What survives an enquiry:
- Receipts (digital photos are fine — keep them in dated folders or in your bookkeeping software).
- Bank and card statements with the business expense highlighted/coded.
- Mileage log — date, from/to, miles, purpose. A spreadsheet works.
- Notes alongside any unusual expense explaining why it was wholly and exclusively for the business.
Frequently asked questions
Can I claim my mortgage as a self-employed expense?+
Not the mortgage itself, but you can claim a proportion of mortgage interest if you use part of your home regularly and exclusively for business. Most sole traders use the £26/month simplified flat rate instead.
Can I claim food when I'm working from home?+
No. Food at home is not a business expense, even if you're working through lunch. Subsistence is only allowable when you're staying away from home overnight on business.
What about my phone bill?+
Claim the business proportion. If 60% of your calls and data are work-related, claim 60% of the bill. A dedicated business phone is 100% claimable.
Are accountancy fees allowable?+
Yes — accountancy and bookkeeping fees, professional body subscriptions, and most legal fees related to your trade are fully allowable. The accountant pays for themselves through correct expense claims.
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