Every pound you spend running your business is a pound that shouldn't be taxed as profit — if you claim it correctly. This guide covers what counts as an allowable expense when you're self-employed, the categories HMRC recognises, the things people wrongly try to claim, and the two shortcuts (the trading allowance and simplified expenses) that save you time.
What "allowable" means
You're taxed on profit, not turnover. Profit is your income minus your allowable expenses. So an "allowable expense" is simply a cost HMRC lets you deduct before the tax is worked out.
The test HMRC applies is that the cost must be wholly and exclusively for the business. A cost that's part personal, part business (your phone, your car, your home) can still be claimed — but only the business proportion.
The nine categories
HMRC groups allowable expenses like this:
- Office costs — stationery, printing, phone and software
- Travel — fuel or mileage, parking, train and bus fares, business-trip costs (not your normal commute)
- Clothing — uniforms and protective clothing (not everyday clothes)
- Staff costs — salaries, and payments to subcontractors
- Stock and raw materials — things you buy to sell on, or to make what you sell
- Financial costs — business insurance, bank and card charges, accountant fees
- Premises costs — rent, heating, lighting, business rates, and a share of home-working costs
- Advertising and marketing — your website, listings, ads, business cards
- Training — courses that update skills for your existing trade
Two of these have dedicated guides because they trip people up: use of home as office and vehicle and mileage costs for drivers.
What you can't claim
The common mistakes that get questioned in an HMRC check:
- Personal spending. Anything not for the business — including the personal share of mixed costs.
- Everyday clothing. A suit or normal clothes aren't claimable even if you "wear them for work"; uniforms and protective gear are.
- Your commute. Travel from home to a regular place of work isn't allowable; travel between jobs or to temporary sites can be.
- Client entertaining. Taking clients out isn't an allowable deduction.
- Fines. Parking and other penalties aren't allowable.
The £1,000 trading allowance
Instead of adding up actual costs, you can deduct a flat £1,000 trading allowance. It's an either/or choice:
- Costs under £1,000? Claim the allowance — it's bigger than your real costs and needs no receipts.
- Costs over £1,000? Claim actual expenses instead — you'll deduct more.
And if your total trading income for the year is under £1,000, the allowance usually means you have nothing to report at all — see what counts as trading.
Simplified (flat-rate) expenses
For three messy areas, HMRC lets you use flat rates instead of working out the exact business proportion:
- Vehicles — 55p per business mile for the first 10,000 miles (from April 2026), 25p after that, instead of apportioning fuel, insurance and repairs.
- Working from home — £10, £18 or £26 a month depending on hours worked from home.
- Living at your business premises — a flat adjustment for things like guesthouses where you also live.
You can mix simplified and actual methods across different areas — for example, mileage for the car but actual costs for everything else.
Keeping records
Whatever you claim, you need to be able to back it up:
- Keep receipts, invoices and bank statements for your business costs.
- Log business mileage as you go — it's near-impossible to reconstruct accurately later.
- Keep business and personal money as separate as you can.
- Hold on to records for at least the period HMRC can check (around five years after the filing deadline for the self-employed).