The same basic rule applies
As with limited companies, an expense must be incurred wholly and exclusively for the purposes of your trade to reduce your taxable profit. Where a cost is part business, part personal, only the business proportion can usually be claimed.
Working from home: the simplified flat rate
HMRC’s simplified expenses scheme lets sole traders claim a flat monthly amount for business use of home, based on the hours worked from home each month, without keeping detailed records of individual bills:
- 25 to 50 hours a month: £10 per month
- 51 to 100 hours a month: £18 per month
- 101 or more hours a month: £26 per month
Alternatively, you can work out the actual business proportion of your household costs, which may be worthwhile if your home-working costs are higher than the flat rate.
Mileage for business journeys
If you use your own vehicle for business journeys, you can claim HMRC’s approved mileage rates instead of tracking individual running costs: 55p per mile for the first 10,000 business miles in a tax year, then 25p per mile after that.
Other common allowable expenses
- Marketing and advertising costs
- Professional fees and bank charges
- Stock, materials and the direct costs of the work you do
- A business-use proportion of premises costs, where you are not using the simplified home rate
- Wages and subcontractor costs where you employ others
- Business insurance
- Subscriptions and licences relevant to your trade
What you cannot claim
Personal expenses, the cost of entertaining clients, and fines or penalties are not allowable against your profits, in the same way as for limited companies.
How MLA Chartered Accountants can help
We help sole traders and partnerships keep accurate, straightforward records throughout the year, so your Self Assessment return reflects every expense you are entitled to claim, without last-minute guesswork.