Sole trader allowable expenses: what you can claim in 2026/27

By The Money Sheets · Last checked 22 October 2026

Allowable expenses are business running costs you deduct from your income to work out your taxable profit. HMRC's own example: turnover of £40,000 with £10,000 of allowable expenses means you pay Income Tax on £30,000.

Costs you can claim

HMRC lists these types of business cost as allowable:

Money you take out of the business for yourself is not an expense. If something is for both business and personal use, claim only the business part: HMRC's example is £70 of business calls out of a £200 phone bill.

Mileage: 55p for 2026/27

Instead of claiming the actual costs of a car or van, you can use HMRC's flat mileage rates. For 2026/27 the car and van rate went up to 55p a mile for the first 10,000 business miles (it was 45p before 6 April 2026).

Worked example from HMRC: 11,000 business miles = 10,000 × 55p (£5,500) + 1,000 × 25p (£250) = £5,750. You can still claim parking and other travel such as trains on top. You can't use the flat rate for a vehicle you've already claimed capital allowances on, and once you use it for a vehicle you must keep using it for that vehicle.

Working from home

You can claim a reasonable share of heating, electricity, Council Tax, mortgage interest or rent, and internet and phone, for example by the number of rooms used for business or the time spent working. Or use HMRC's flat rate if you work 25 hours or more a month at home:

The flat rate doesn't include phone or internet; claim the business share of those separately.

Equipment and the trading allowance

If you use traditional accounting, equipment, machinery and business vehicles are claimed as capital allowances. On cash basis, most things you buy and keep for the business are allowable expenses, but cars are still capital allowances. If you use the £1,000 trading allowance, you can't claim expenses or capital allowances, so it only helps if your costs are under £1,000.

Keeping track through the year

Our Sole Trader workbook sorts expenses into the SA103 categories as you go, logs mileage at 55p/25p, works out the use-of-home flat rate, and gives you year-to-date quarterly totals for your Making Tax Digital records (use it with digitally linked bridging software to send them). The Pro version adds a receipts and allowable-expenses checklist.

Last checked against GOV.UK on 22 October 2026. The Autumn Budget on 28 October 2026 may change some rules for later tax years; we re-check this page after each Budget and every April.

Sources

• GOV.UK: Expenses if you're self-employed (checked 22 October 2026)
• GOV.UK: Simplified expenses: vehicles (checked 22 October 2026)
• GOV.UK: Simplified expenses: working from home (checked 22 October 2026)

This guide is general information, not tax, legal or financial advice.