Claiming the right expenses is one of the simplest ways for self‑employed people in the UK to legally cut their tax bill, because it lets you deduct genuine business costs before HMRC works out how much tax you owe. By understanding what’s allowable and keeping good records, you stop overpaying tax and avoid the risk of HMRC challenging claims that don’t stack up.
When you’re self‑employed, most day‑to‑day running costs, such as things like office supplies, travel for work, marketing, insurance, and a share of home‑working costs, can be treated as “allowable expenses.” These can help you to save money on the amount of tax you pay, as they can be used to reduce the net profit earned that HMRC then uses to calculate your Income Tax and National Insurance contributions.
What’s worth remembering is that HMRC will only tax you on taxable profits. If you can legitimately show that many of your expenses are deemed as “allowable”, this can reduce your overall bill. For example, if you bill £50,000 in a year but have £15,000 of legitimate expenses, HMRC only taxes you on £35,000, so every valid £1 you claim reduces the slice of income that can be taxed. You can use our self-employed tax calculator to help you understand what you can potentially claim.
Naturally, mistakes happen frequently. A lot of self‑employed people either under‑claim or over‑claim because the rules are full of grey areas, especially where something has both personal and business use, like your phone, car, or home. Others assume “if I pay for it, I can claim it”, or go the other way and avoid claiming anything they’re unsure about, which means missing out on things like a portion of household bills, professional fees, and even some training costs.
In this article, I’ll explain everything you need to know about allowable expenses, highlighting what you can and cannot claim against.
What Does HMRC Actually Allow You to Claim?
An allowable business expense is defined as a cost you incur solely for running your business that HMRC lets you deduct when working out your taxable profit. HMRC’s core test is that the expense must be “wholly and exclusively” for the purposes of the trade, which means your only real purpose in spending the money was business, not private benefit.
So, what are allowable business expenses? These are the day-to-day running costs of your business, such as office costs, travel costs, marketing and promotion costs, certain insurance costs, or even a portion of home costs if you work from home. These costs are then deducted from your business income to work out your taxable income.
The HMRC’s “wholly and exclusively” rule means you can only deduct the costs that are associated with your business and nothing else. You cannot claim on non-business-related costs. This requires that you keep business costs separate from personal spending costs, meaning you have to be extremely organised and only put your business share through your records when submitting a tax return. Where you can identify a definite business proportion of a cost, that proportion is normally allowable even if the rest is private.
What about mixed-use expenses? These are expenses that can include phone, internet, home utilities, and clothing. These are where things become a little confusing for many, but it’s worth remembering HMRC allows you to claim a reasonable, evidence‑based business percentage if your usage records support that split. You won’t be able to claim on everyday clothing if it doesn’t relate to your business (non-uniform), some client entertainment, or holidays that have been packaged as a ‘business trip’.
What Can You Claim If You Work From Home?
Since the pandemic, more of us are working remotely, meaning we work from home. This hasn’t necessarily been a major change for many self-employed professionals; however it perhaps opened up a new career path for many. As a result, many would have started blindly during tax season, as they may not have been aware of specific expenses they could claim back.
HMRC lets you claim a chunk of your household costs, but you have to choose a method and only claim the genuine business part. You can either use HMRC’s flat‑rate “simplified expenses” or work out the actual cost based on a fair business percentage of your bills.
If you run your business from home, you can usually claim a share of costs like heating, electricity, council tax, mortgage interest or rent, plus internet and phone use. You do this through your Self Assessment tax return, treating them as part of your normal business expenses.
HMRC’s simplified expenses use a fixed flat rate each month based on the number of hours you work from home. As of June 2026, the monthly flat rates are £10 (25-50 hours), £18 (51-100 hours) or £26 (101+ hours). This covers general home running costs, but not your broadband or phone, which still need to be split on an actual‑use basis. Say you work 90 hours a month from home, you can claim £18 per month plus the business share of your phone and broadband.
If you want to work it out on the actual cost method, you can claim a proportion of your real bills using a reasonable method. A common approach is: number of rooms used for business ÷ total rooms, then base it on how many hours you actually work there. If you have five rooms and use one as an office for eight hours a day, five days a week, you might claim 1/5 of your yearly electricity and gas usage, then reduce it further if the room is not used solely for business.
So, what specific costs can you claim?
- Home Office: A proportion of running costs and office furniture used solely for business.
- Broadband: A reasonable business percentage; personal streaming, browsing, and gaming not allowable.
- Phone Bills: You can only claim for business calls.
- Electricity and Gas: You can only claim how much of your energy use relates to your work area and working hours.
- Water: Harder to claim unless your business needs significant water use.
- Rent: If you rent, you can claim a fair share of your rent attributable to the business use of your home.
- Mortgage Interest: You cannot claim capital repayments, but you can claim a proportion of the mortgage interest as a business cost.
- Council Tax: A reasonable share of council tax can be claimed where part of the home is used for business.
It’s important to know that you could do the following if your annual rent is £12,000 and you reasonably treat 10% as business use based on calculations: you could claim £1,200 as a business expense, alongside similar 10% splits for gas, electricity and council tax.
What Equipment, Software and Running Costs Can You Claim?
Most day‑to‑day equipment, software and office running costs you buy for your business can be claimed as allowable expenses and deducted from your profit before tax.
The main rule is that they must be used wholly and exclusively for business, or you only claim the business proportion if there is some personal use.
You will encounter the term ‘capital allowances’; these are just the mechanism HMRC uses to give tax relief on bigger, longer‑term assets like computers, office furniture and some equipment. In practice, small self‑employed businesses often still get 100% tax relief in year one through the Annual Investment Allowance; the main difference is how you record the item in your accounts rather than the amount of relief you ultimately get.
Can I claim a laptop, computer or office equipment?
You can usually claim on the cost of laptops, computers, monitors, printers and similar kit that you use in your business. If you use cash‑basis accounting, most of these can simply go in as normal business expenses in the year you buy them; under traditional (accruals) accounting, longer‑lasting, higher‑value items are usually claimed via capital allowances instead. Where an item has mixed use, such as a laptop used 80% for work and 20% for personal browsing, you only claim the business share of the cost.
Office furniture, such as desks, chairs, and filing cabinets, is also claimable when bought for business use. Again, if it is a significant, long‑life item and you use traditional accounting, you may claim it as a capital allowance rather than an everyday expense, but the tax result is still that you get relief on the business cost.
Stationery, postage and other office costs
Everyday consumables such as paper, pens, notebooks, printer ink and envelopes are straightforward allowable expenses, as long as they are for your business. Postage and courier costs for sending goods or documents to customers, suppliers or HMRC are also fully allowable.
Website costs, including domain names, website hosting, email hosting, and SSL certificates, are normally treated as advertising or office costs and can be claimed in full where they relate to your business website
Can I claim software subscriptions and cloud tools?
Regular software subscriptions for your business, such as Microsoft 365, Adobe Creative Cloud, design tools, project‑management apps, cloud storage, and accounting software, are allowable expenses when used for business purposes. Because you pay for these monthly or annually, HMRC treats them as normal running costs rather than capital items, even if you use them for more than two years.
Cloud storage (for example, business Dropbox, Google Drive or similar) and online accounting software (for example, Xero, QuickBooks, FreeAgent) are claimed in exactly the same way as other software subscriptions. Personal streaming or gaming subscriptions, or personal cloud storage, are not allowable even if you sometimes use them while you’re working.
What Travel and Vehicle Costs Can You Claim?
You can claim a wide range of travel and vehicle costs as a self‑employed person, but only where the journey is genuinely for business and not just your normal commute or a personal trip.
If you use your own car, van, motorbike or bicycle for business, you can usually claim either: a fixed HMRC mileage rate, or a share of your actual running costs. For many small businesses, the mileage method is the best and easiest approach.
From April 2026, the HMRC‑approved mileage rates for cars and vans are 55p per mile for the first 10,000 business miles in the tax year, then 25p per mile after that. Motorcycles and bicycles have their own lower flat rates per mile. If you drive 4,000 miles for business in your car, you can claim £2,200 as a business expense.
If you use the mileage method, you do not claim separate fuel, servicing, or insurance; the rate is designed to cover those costs. If instead you use the “actual cost” method, you can claim the business share of fuel, insurance, repairs, tax, breakdown cover and so on, based on your business‑use percentage. You can also claim business parking fees, road tolls and congestion charges. Fines and penalties (like speeding tickets or penalty charge notices) are never allowable.
If you travel by train, bus, tram, taxi, plane, or ferry for business, you can claim the cost as long as it is for business purposes and isn’t just ordinary commuting. Hotel stays for overnight business trips are also allowable, along with reasonable meals while you are away. These can include dinners and breakfast when staying overnight, but do not include day-to-day snacks or lunches near your usual base.
If you have to travel to attend a client meeting, you can typically claim for fares, mileage and related hotel costs.
Entertainment isn’t typically allowable, such as hosting at a dinner or going to a show. Other things that aren’t claimable include commuting between your home and normal place of work, and personal trips, such as holidays.
What Professional and Marketing Costs Can You Claim?
Most professional and marketing costs that keep your business running or help you acquire work are allowable expenses, as long as they are genuinely for the business and not personal. HMRC broadly treats professional fees, insurance and advertising as normal running costs, so they reduce your taxable profit in the same way as rent or utilities.
You can usually claim the cost of using an accountant or bookkeeper to help with your business accounts and Self Assessment. Fees for business‑related legal advice are also typically allowable, though fines, penalties and purely personal legal disputes are not.
Professional indemnity insurance, public liability insurance and other business‑related policies are allowable, because they exist solely to protect your business. Trade body memberships and professional subscriptions are generally fine too, where the organisation is relevant to your work and not mainly social.
Training courses aren’t typically deemed as allowable expenses, as they are seen as capital or personal development rather than a running cost. However, updating current skills, such as ongoing CPD to maintain a professional qualification, qualify.
Most marketing and advertising spending aimed at promoting your business, attracting customers, or maintaining your reputation is allowable. That includes:
- Online Ads: using social media and Google to help you promote
- Website Costs: domain names, website hosting, template themes, small design tweaks, email hosting and similar running costs for your business site.
- Non-digital Costs: If you promote through leaflets, business cards, posters, etc., you can claim them as long as they clearly promote the business.
Which Expenses Can’t You Claim and What Records Should You Keep?
Quick-glance table:
| Usually Claimable | Usually Not Claimable |
| Business mileage | Normal commuting |
| Software | Everyday clothing |
| Advertising | Personal shopping |
| Training | Personal holidays |
Remember, anything claimable must pass HMRC’s “wholly and exclusively” test for business purposes. If there is a clear personal element, then it will not be claimable.
You don’t need a paper receipt for every tiny purchase, but you do need evidence that backs up what you put on your tax return. That means keeping invoices, receipts, bank statements, mileage logs, and notes that show how you calculated any percentages. Digital copies are fine; you can scan or photograph receipts and store them in bookkeeping software, cloud storage, or simple folders, as long as they are readable.
With Making Tax Digital (MTD) starting to come into full effect, it’s recommended to keep digital records and file updates using compatible software immediately. For Self Assessment, you normally need to keep your business records for at least five years after the 31 January deadline for the relevant tax year, because HMRC can ask to see them during that period.
HMRC requires accurate record-keeping, and digital records are becoming increasingly important under Making Tax Digital.
