Becoming a Sole Trader
Becoming Self Employed/Sole Trader
Which self-employed expenses are allowable expenses?
When you’re completing your tax return, these are some of the costs that usually count as allowable business expenses.

Office expenses
You can include business stationery, printing costs (including printer ink), and postage. You can also include business equipment like computers and printers and computer software, but you may have to claim these as capital allowances if you don’t use cash basis accounting.

Business premises
You can claim expenses for rent, maintenance and repair, utility bills, property insurance, and security. You can’t claim expenses for buying or building your business premises.
If you run your business from home, you can include part of your home utility bills, but you need to work out the proportion of your home that’s used for business, and what proportion of the month it’s being used for business purposes. If you work from home at least 25 hours a month, you can use ‘simplified expenses’, which is a flat monthly rate calculated by the government.

Travel
You can include business-related car or van costs, including vehicle insurance, fuel, hire charges, repairs, servicing and breakdown cover. This can be difficult to calculate, so you can use ‘simplified vehicle expenses’, which is a flat rate provided by the government.
You can also include business travel by train, bus, plane or taxi, and hotel rooms and meals during overnight business trips.
Bear in mind that travel for meetings, site visits etc. is included, but you can’t claim for the cost of travelling between home and work, so commuting or travelling to your business premises doesn’t count.
Also note that if you take a journey for both personal and business reasons, you must be able to separate out the business cost in order to include it.
You can’t claim for entertaining clients, suppliers and customers, or event hospitality.

Business insurance
You can include the cost of business insurance, for example public liability insurance and professional indemnity insurance. There’s more information about this on our FAQ pages.

Marketing
The cost of marketing including newspaper advertising, directory listings, mailshots, free samples and website costs can be claimed.

Clothing
You can include the cost of uniform, necessary protective clothing, or costumes for actors or entertainers, but you can’t include the cost of everyday clothing that you wear to work.

Staff costs
Employee and staff salaries count as allowable expenses, as do bonuses, pension contributions, benefits, agency fees and employer National Insurance contributions.

Subscriptions
You can include the cost of membership to trade bodies or professional membership organisations if they’re relevant to your business, and the cost of subscriptions to trade or professional journals.

Stock and materials
You can include the cost of your stock, your raw materials, and the direct costs that arise from producing your goods.

Legal and financial costs
If you need to hire a professional like an accountant, a solicitor, a surveyor or an architect for business reasons, you can include the cost in your calculation.
You can also include bank, overdraft and credit card charges, interest on bank and business loans, hire purchase interest and leasing payments. Note that if you’re using cash basis accounting, you can only claim up to £500 in interest and bank charges.

There may be other expenses you can claim, please discuss this with us.
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