Small business
Allowable expenses: what the self-employed can actually claim
The rule that governs every expense claim is short: the cost must be incurred wholly and exclusively for the purposes of the business. Everything else is detail. But the detail is where money is left on the table — and where careless claims invite trouble.
What's clearly allowable
Stock and materials. Staff costs. Premises costs — rent, utilities, business rates. Professional fees, including your accountant. Insurance. Marketing and advertising. Software, subscriptions and phone costs used for the business. Travel to temporary workplaces. Bank charges and interest on business borrowing. Training that maintains or updates skills you already use in the business.
Where it gets interesting
Working from home. Two routes: HMRC's simplified flat rate (a fixed monthly amount based on hours worked from home — quick, no records needed) or the apportionment method (work out a fair proportion of your actual heating, lighting, council tax, mortgage interest and broadband by room count and business use). Sole traders with a genuinely dedicated workspace are often meaningfully better off apportioning. It's worth doing the sum once rather than defaulting to the flat rate for a decade.
Vehicles. Either mileage at HMRC's rate (currently 45p a mile for the first 10,000 business miles, 25p thereafter) or actual costs apportioned for business use — fuel, insurance, repairs, capital allowances. You pick one method per vehicle and stick with it. Mileage suits most; heavy business users of expensive vehicles often do better on actual costs. Commuting to a permanent workplace never counts.
Mixed-use costs. A phone used for both is apportioned. A laptop used 80% for work is claimed at 80%. Be honest and consistent, and keep a note of how you arrived at the split — that note is your defence.
What gets challenged
Everyday clothing, however work-appropriate. Ordinary food and drink. Client entertaining (not allowable, full stop). Fines and penalties. Anything with a personal benefit you've claimed in full. HMRC doesn't need to prove you're wrong — you need to be able to show you're right.
The habit that matters
Capture the receipt at the moment of the spend, not in January. With DEXT, a photo takes seconds and the record is done. The expenses that go unclaimed are almost never the ones people argue about — they're the small, legitimate ones that were forgotten because the receipt was lost. That's the money most sole traders are actually leaving behind. If you'd like a second pair of eyes on what you're claiming, that's exactly the kind of review we do at year-end.
This is general information, not advice for your circumstances. If you'd like it applied to your situation, get in touch — the first chat is free.
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