If you’re sole trader or a freelancer, your business will have various running costs. You can deduct some of these costs to work out your taxable profit if they’re allowable expenses.
HMRC allows you to deduct the costs of certain purchases that are necessary to run your business. These costs can be deducted from your profit and, by doing so, will reduce the amount of tax you’ll owe.
It’s important to ensure that you pay the right amount of income tax. To avoid paying more than is necessary, you should claim for your allowable business expenses.
If you are claiming expenses, don’t forget to keep a in depth record of them, along with all your business receipts. Bank statements can sometimes work instead, but it’s best to stay on the safe side!
What are allowable business expenses for sole trade?
Here is a list of the most common allowable expenses that you can claim against your income tax:
Office supplies
- Stationery
- Printing costs / ink
- Postage
- Phone and internet bills
- Softwareused for under two years (or on subscription)
Office equipment
- Computer hardware
- Printers
- Software used for over two years
Business premises
- Rent
- Business rates
- Utilities
- Buildings insurance
- Maintenance / repair
- Security costs
Transport (not traveling between work and home)
- Fuel costs OR business mileage
- Parking costs
- Hire costs
- Vehicle license fees
- Breakdown cover
- Train, bus, air and taxi fares
- Hotel rooms
- Vehicle insurance
Raw material/ stock (things you buy to sell)
- Goods for resale (stock)
- Raw materials
- Direct costs from producing goods
Clothing
- Work uniform
- PPE
Marketing
- Advertising
- Website costs
- Free samples
Professional insurance
- Public liability insurance
- Professional indemnity insurance
- Travel insurance
Trade subscriptions
- Subscription fees are tax-deductible only if the organisation appears on HMRC’s approved ‘List 3’
- Trade journal
Legal and professional costs
- Accounting fees
- Financial adviser fees
- Solicitor fees
Speak to an expert
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