Expenses When Self Employed: What to Claim 2026

MTDFix guide · Author: Marina Jahan · Tax review: Shamayun Chowdhury (ACMA) · Tax year 2026/27 · Refreshed October 2026

Callum left a salon job to work as a mobile hairdresser. Within six months his van was full of colour products, his phone never stopped ringing with bookings, and a shoebox of receipts sat on the passenger seat. Like most new sole traders, he had one question for his first tax return: which of these can I actually take off my profit?

Below we set out how expenses when self employed are treated for 2026/27. You’ll find the test HMRC uses, a category-by-category checklist, flat-rate options for mileage and home working, how real costs stack up against the £1,000 trading allowance, and tips on record keeping under both Self Assessment and MTD.

Expenses When Self Employed: How HMRC Decides

The question most people type into Google is “what can I claim as self employed?” The answer from HMRC rests on one phrase. A cost counts if you spend it wholly and exclusively for your trade. Shampoo bought for clients passes. A haircut for yourself doesn’t, even if it helps you look the part.

Real life is messier, because plenty of things serve two purposes. The table shows how to handle the usual dual-use items.

Whatever method you choose, note it down and use it the same way every year. That record is your answer if HMRC ever asks.

Equipment, cash basis and the car rule

Consumables and running costs reduce profit in the year you pay for them. For tools and kit, the default since April 2024 has been cash basis accounting, under which most purchases, such as a laptop, a hairdryer or a sewing machine, are simply deducted when bought. Cars are treated differently under every method. Their cost is relieved through capital allowances rather than as an everyday expense.

Costs HMRC turns down

Some spending is never deductible, however closely it’s linked to your work. Expenses for self employed traders that HMRC refuses include:

• parking fines, speeding tickets and other penalties;
• normal clothes, though branded uniforms and safety gear qualify;
• meals and drinks for clients or suppliers;
• your own lunch on a typical working day;
• the trip from home to a fixed workplace you attend regularly;
• drawings, meaning money you take out to live on.

Self Employed Allowable Expenses List: The Ten Categories

GOV.UK sorts allowable expenses self employed traders can deduct into ten groups. When you tally expenses when self employed, use the table as a sole trader expenses list when you go through a year’s bank statements. The right-hand column flags the costs people most often put in the wrong place.

Professional help belongs on the list as well. Fees for your accountant, or a solicitor dealing with a business contract, reduce profit. That includes the bill for preparing your self assessment expenses and return each year.

Your vehicle

There are two routes for a car, van or motorbike. The first is to total the real running costs for the year (fuel, servicing, insurance, tax and repairs), deduct the business percentage and add capital allowances on the purchase. The second is HMRC’s mileage method: 45p for each of the first 10,000 business miles, 25p for each mile after that, and 24p per mile on a motorcycle. Mileage rates replace all running costs, and choosing them for a vehicle locks you in while it stays in your business. Company car drivers follow separate figures, set out in our page on HMRC advisory fuel rates.

Phones, broadband and apps

A second handset kept just for work is fully deductible. One phone for everything means a split, usually based on a typical month’s usage. Treat home broadband the same way. Booking systems, invoicing software and cloud storage used solely for the business can be claimed in full.

Bigger items

Under cash basis, a new laptop, camera or set of tools is normally deducted in one go. If you use traditional accounting, the Annual Investment Allowance usually gives the same result. Where you also use the item at home, cut the deduction to match the work share. VAT-registered traders should also look at reclaiming the VAT on the purchase.

Expenses When Self Employed and Working at Home

Invoices written at the dining table, bookings taken from the sofa, stock stored in the box room: home is the office for many sole traders. HMRC offers two ways to reflect that, and you’re free to use whichever gives the higher figure.

Option A: HMRC’s fixed monthly amount

Known as the HMRC working from home allowance, self-employed traders deduct a set sum per month, scaled to the business hours they put in at home. Months with fewer than 25 hours don’t qualify for this self employed working from home allowance.

These amounts deal with household energy. Phone and internet aren’t included, so add the work portion of those on top. A diary or spreadsheet of hours is enough evidence.

Option B: your real household costs

The other method uses actual bills. Total the year’s heating, electricity, water, council tax and rent or mortgage interest, then estimate the share linked to work. One widely used approach looks at rooms and time. If one of six rooms is used for work for 60% of the day, the claim is 10% of the bills. It’s more effort, but larger homes and higher bills often justify it. Be careful with rooms used purely for business, though: that can affect Capital Gains Tax relief when you sell, so get advice first.

When you live where you trade

Owners of guest houses, care homes or a shop with a flat above use a separate flat rate. You claim the full premises costs, then take off a set monthly figure for private living: £650 where three or more people live on site, £500 with two, and £350 with one.

Expenses When Self Employed or the £1,000 Trading Allowance?

The trading allowance replaces expenses rather than adding to them. Take it and you knock £1,000 off your income in place of any real costs, or you needn’t report at all if gross takings are £1,000 or less. The better option depends on your numbers.

The picture flips for small side earnings. Someone selling handmade cards online for £1,400 a year with £250 of costs would show £1,150 profit by claiming expenses, against £400 with the allowance. Plug your own figures into our sole trader tax calculator to compare.

Keeping Records of Expenses When Self Employed

Every deduction needs evidence behind it. HMRC can question any line on your return, and a tidy set of records turns that from a worry into a short email. Ten minutes each week is easier than three days of sorting in January.

Keep it all for no less than five years after that year’s 31 January filing date. Photos and PDFs are acceptable if they’re legible.

On the return itself, a business with turnover below the £90,000 VAT threshold can show expenses as a single total; larger businesses break them into categories. Making Tax Digital for Income Tax keeps the same expense rules but asks for them more often. Sole traders and landlords with qualifying income above £50,000 have kept digital records and sent quarterly updates since 6 April 2026. The £30,000 tier starts in April 2027, then the £20,000 tier in April 2028. Because each update sorts expenses by category, labelling receipts as they arrive saves effort later. Our sole trader MTD software comparison sets out the choices.

Self Employed, What Can I Claim? Common Questions

What can you claim for self employed car use?

You pick one approach per vehicle: real running costs (work share) with capital allowances, or HMRC’s mileage rates. Regular commuting is excluded either way.

What expenses can I claim as self employed if I lost the receipt?

The cost is still allowable if you can show it in other ways, such as a bank statement or supplier email. Get into the habit of photographing receipts straight away.

Are work clothes deductible?

Only uniforms with your logo, protective wear and costumes. Outfits you could wear socially don’t count.

Can I claim meals?

When a work trip takes you away from your normal base, reasonable food costs are allowable. A sandwich on an ordinary workday isn’t.

What about money spent before I launched?

Costs paid up to seven years before trading began can usually be claimed as though paid on your first trading day, if they would have qualified at that point.

Is a gym membership allowable?

No, not even for fitness instructors. Work-related training courses are a separate matter and can qualify.

I missed a cost on last year’s return. Can I fix it?

Yes. Returns can be amended within 12 months of the 31 January filing date, and older years may be covered by an overpayment relief claim for up to four years.

Are accountancy fees deductible?

Yes, for business accounts and your tax return.

Expenses When Self Employed: Our Final Verdict

Handling expenses when self employed well is less about tax knowledge than routine. Deduct only what the business genuinely uses, divide shared bills by a method you can explain, and file the proof. Once a year, weigh flat rates against actual costs and see if the £1,000 allowance would serve you better. With MTD on the way for most sole traders, a quarterly tidy-up of receipts is the habit that pays off most.