How to Claim Allowable Expenses on Self Assessment: The Complete 2026 Guide (Part 4)

Quick answer

For self-employed people, the difference between your gross income and your taxable profit is everything — and the rules on what HMRC allows you to deduct are surprisingly specific. The fundamental principle is simple: expenses must be incurred wholly and exclusively for the purposes of your trade. In practice, many borderline cases exist, and the difference between a correct claim and an HMRC-disallowed one can add thousands of pounds to your tax bill — or, if you over-claim, trigger an enquiry.

This is Part 4 of the UK Self Assessment From Scratch series. Part 3 covered how to declare all your income types. This part covers the expenses side: what HMRC allows, what it explicitly disallows, the simplified methods available, and what records to keep.

The fundamental test: wholly and exclusively

Section 34 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) is the statutory basis for deductibility. It states that expenses are allowable only to the extent they are incurred wholly and exclusively for the purposes of the trade.

Dual-purpose expenditure — items that serve both personal and business purposes — is generally not deductible at all, unless the business and personal elements can be clearly and objectively separated. HMRC takes this seriously: if you buy a phone plan that covers both personal calls and business calls, you cannot claim the full cost. But you can claim the business proportion — say, 60% if roughly 60% of your usage is demonstrably business-related.

The relevant case law reinforces this rigorously. In Mallalieu v Drummond [1983], a barrister tried to deduct the cost of black court clothing. The House of Lords ruled it was not deductible because the clothing served a purpose beyond the professional one — keeping her warm and decent. That principle still governs HMRC's approach today.

Vehicle and mileage costs

AMAP (Approved Mileage Allowance Payments)

The simplest way to claim vehicle costs for business journeys is HMRC's flat-rate mileage system:

These rates (unchanged since April 2011) are designed to cover all costs of using your vehicle — fuel, oil, insurance, tyres, servicing, MOT, and a depreciation allowance. You claim the total amount as a single expense on your SA103.

Example: Sole trader plumber Tom drives 8,500 business miles in 2025/26. His AMAP claim is 8,500 × 45p = £3,825.

Mileage log requirements

HMRC expects a contemporaneous mileage log. A spreadsheet, mileage tracking app (MileIQ, TripLog, Auto Mileage Logbook), or a physical diary all work. Each entry should record:

• Date of journey
• Start location
• Destination
• Business purpose of the journey
• Miles driven

Commuting from your home to a permanent place of work is not a business journey and cannot be claimed. However, if you are self-employed and work from home, a journey from home to visit a client is a valid business journey — you are travelling from your place of business.

Actual cost method

Instead of AMAP, you can claim the actual costs of running your vehicle apportioned by business use. This means tracking:

• Fuel costs
• Insurance premiums
• Servicing and repairs
• Road tax
• MOT costs
• Finance charges or depreciation allowance (via capital allowances)

You then calculate your business mileage as a percentage of total mileage and apply that percentage to the total costs.

Which method to choose: AMAP is simpler and often more generous for lower-mileage, efficient cars. Actual costs can be better for high-business-mileage drivers with expensive, fuel-intensive vehicles. You must choose one method per vehicle per year — you cannot switch mid-year, and once you use actual costs for a vehicle, you cannot switch back to AMAP.

Working from home

The flat rate (no calculation required)

HMRC's working from home flat rate is £6 per week (£312 per year) for 2025/26. You can claim this without any receipts or calculations, provided you work from home regularly as part of your business — not merely occasionally.

This is the simplest approach and is worth claiming even if the actual proportion of your home costs would produce a smaller figure. For many self-employed people with modest dedicated workspace, £312 is a reasonable approximation.

The actual cost method

For a higher deduction, calculate the proportion of actual home running costs attributable to business use:

1. Identify your dedicated business space (in square metres or number of rooms).
2. Calculate it as a proportion of total home floor area.
3. Apply that proportion to eligible costs: gas, electricity, broadband (only if used at home for business), and optionally council tax and water rates.
4. Further apply a time proportion if the space is not used exclusively for business (e.g., a room you use as both a study and a spare bedroom).

Example calculation:

Charlotte runs a graphic design business from a dedicated home studio — one room in a 6-room house. She uses it purely for business, 5 days a week.

• Annual gas and electricity: £1,800
• Annual broadband: £360 (full cost attributable to home)
• Floor area proportion: 1/6 = 16.7%
• Gas and electricity claim: £1,800 × 16.7% = £300
• Broadband: Charlotte estimates 70% business use, so claims 70% × £360 = £252
• Total actual working-from-home claim: £552 vs £312 under flat rate

In Charlotte's case, the actual cost method produces a higher deduction.

What you cannot claim under either method: mortgage interest or rent for your home — these are personal expenditures. (Rental properties are different; Part 3 covers mortgage interest for rental.) If you were ever to sell your home, claiming a large portion of it as business premises could create a partial Capital Gains Tax liability on the business-use portion — something to consider before making a large actual cost claim.

Equipment and technology

Capital items — equipment you buy and use over multiple years — are handled through capital allowances rather than as direct expenses. However, for most small businesses:

Annual Investment Allowance (AIA)

The AIA lets you deduct 100% of the cost of qualifying plant and machinery in the year you buy it, up to a limit of £1,000,000 per year (well above the needs of any sole trader). Qualifying items include:

• Computers, laptops, tablets, monitors
• Cameras and photography equipment (for a photography business)
• Workshop machinery and tools
• Office furniture used exclusively for business

Enter the cost in the Capital Allowances section of SA103F, or use the simpler SA103S box for "Capital allowances" if using the Short form.

If you use an item partly for business and partly privately (e.g., a laptop used for personal browsing too), apply a business-use percentage. A 70% business-use laptop costing £1,200 generates a £840 AIA claim.

Software subscriptions

Annual software subscriptions are typically deductible as an ongoing business expense (not a capital item) — enter them in the "Other business expenses" box. This covers:

• Adobe Creative Cloud
• Microsoft 365 for Business
• QuickBooks, Xero, FreeAgent (accounting software)
• Slack, Zoom, project management tools
• Industry-specific tools

If you pay monthly, total up the 12 payments for the year and claim the full annual amount.

Marketing and advertising

All genuine marketing and advertising costs are deductible:

Promotional gifts to customers are deductible only if they: (a) carry a prominent advertisement for your business, (b) cost no more than £50 per recipient per year, and (c) are not food, drink, tobacco, or exchangeable vouchers.

Professional fees and memberships

What qualifies

• Accountant fees for preparing your self assessment return or advising on business tax
• Solicitor fees for business contracts, lease negotiations, or employment issues
• Business bank charges (monthly fees, transaction charges on a dedicated business account)
• Professional body subscriptions that are HMRC-approved for your trade (Institute of Chartered Accountants, Law Society, Chartered Institute of Marketing, etc.)
• Professional indemnity insurance and public liability insurance for the business

HMRC publishes a list of approved professional organisations at gov.uk/guidance/professional-organisations-and-learned-societies. Only subscriptions on this list are deductible.

What does not qualify

• Personal career development memberships: LinkedIn Premium for general networking and job searching fails the "wholly and exclusively" test because it serves personal career purposes.
• Personal accounting fees: the cost of getting advice on your personal (non-business) tax affairs is not deductible.
• Legal fees for capital transactions: buying or selling a business, acquiring a long-term lease, or defending a lawsuit about a capital asset — these are capital costs and must go through capital allowances rather than as revenue expenses.

Training and development

This area generates more HMRC disputes than almost any other expense category. The rule is clear in principle but contentious in practice:

Claimable: training that maintains or updates skills directly relevant to your existing trade.

• A solicitor taking CPD courses to maintain their practising certificate
• A web developer attending a conference on the latest JavaScript frameworks
• A photographer taking a Lightroom editing masterclass
• An accountant studying for a qualification in their current specialism

Not claimable: training to acquire new skills for a different trade or career, or training before you start trading.

• A marketing consultant paying for a coding bootcamp to pivot into software development
• A teacher paying for personal training qualifications to become a gym instructor (new trade)
• A freelance writer taking a legal conversion course

The distinction matters because HMRC's view is that pre-trade training (acquiring skills to enter a trade) is a capital cost associated with setting up the business — not an ongoing business expense. Post-trade training (updating skills in an existing trade) is revenue expenditure and deductible.

Grey area: a freelance consultant who begins offering an adjacent service (e.g., a social media manager who starts offering email marketing) — HMRC would likely accept this as maintaining and extending existing skills rather than entering a new trade, provided the two activities are clearly related.

Pre-trading expenses

Before you officially start trading, you may have incurred costs — setting up a website, buying equipment, taking professional advice, or attending training. HMRC allows you to claim these on your first self assessment return, provided:

• The expenses were incurred within the seven years immediately before the date you started trading.
• The expenses are the type you would have been able to claim had they been incurred after trading began.
• You can demonstrate they were wholly and exclusively for the purpose of the business you eventually started.

Practical examples of claimable pre-trading expenses:

• Website development before launch
• Equipment bought before the first client
• Accountant fees for business planning
• Professional training directly relevant to the business
• Business registration costs

Enter these as normal business expenses on SA103, and add a note in the Additional Information box explaining the dates and nature of the pre-trading period.

Clothing and protective equipment

The rule is strict:

Claimable:

• Uniforms or protective clothing that is not suitable for everyday wear
• Chef's whites, high-visibility jackets, hard hats, safety boots, laboratory coats
• Theatrical costumes for performers (actors, musicians, entertainers)

Not claimable:

• Business suits, smart dresses, or casual clothing, even if worn only for work
• Clothing bought to create a professional image for client meetings
• Everyday shoes, even if worn exclusively to work

The test is always: could this item be worn outside of the work context without looking unusual? If yes, it is not deductible.

Subsistence and travel

Travel to client sites and away from base

Travel costs incurred going to client meetings, site visits, or other locations away from your normal place of business are deductible:

• Train, bus, and taxi fares for business journeys
• Flights for business travel
• Overnight accommodation when a trip requires you to stay away from home
• Reasonable meal costs when staying away overnight

"Reasonable" for HMRC means broadly what an employee would receive under HMRC's benchmark subsistence rates — approximately £5 for a 5-hour absence from home and £10 for a 10-hour absence, with an additional £25 for overnight stays. More generous amounts may be challenged.

What is not travel

• Commuting from home to a permanent fixed place of work is never deductible.
• However, if you work from home (your home is your business base), any journey to visit clients or suppliers is a business journey from your place of work.

Meals without overnight stay

HMRC takes a restrictive approach to meal costs on day trips. If you travel away from your base for a day trip (no overnight stay), the cost of meals is generally not deductible unless:

• You are travelling to a temporary workplace you attend for no more than 24 months continuously, AND
• The travel involves "a significant amount of time" away from your base

For most sole traders visiting clients for a day, the prudent approach is not to claim meal costs on day trips — the rules are complex and HMRC scrutinises them.

Client entertainment: the explicit prohibition

Client entertainment is explicitly disallowed by HMRC under Section 45 ITTOIA 2005. It does not matter how commercial the purpose — a client dinner to close a deal, drinks at a trade event, or a corporate hospitality event for key customers cannot be claimed.

"Entertainment" means providing food, drink, accommodation, theatre or sports tickets, or hospitality of any kind to a business contact. The prohibition applies whether the contact is a customer, supplier, or potential client.

Exception: entertaining staff. A sole trader with no employees cannot claim this. But if you have staff (even part-time employees), reasonable staff entertainment (a Christmas party within HMRC's £150-per-head annual limit, for example) is deductible and exempt from benefit-in-kind rules.

Disallowable items: a summary checklist

These common items cannot be claimed as business expenses:

Simplified expenses: a useful shortcut

HMRC offers simplified expenses for sole traders — flat-rate deductions that replace the need for detailed calculations. Simplified expenses apply to:

• Vehicles: the AMAP rates already described above.
• Working from home: flat rate based on hours worked from home per month:

Note: the maximum working-from-home flat rate (£26/month × 12 = £312/year) equals the HMRC-approved £6/week flat rate. For most self-employed people, the £6/week shorthand is simpler.

• Business use of home: if you live at business premises (e.g., a B&B owner), HMRC has flat rates for the non-business use proportion, applied in reverse.

Simplified expenses do not require receipts for the flat-rate elements — HMRC accepts them as a proxy for actual costs. You can mix and match: use AMAP for vehicles and actual costs for home office, for example.

Record-keeping: what HMRC expects

HMRC expects you to retain evidence for all expense claims for five years after the 31 January filing deadline for the relevant year. For 2025/26 returns filed January 2027, that means keeping records until January 2033.

Acceptable records:

• Original receipts and invoices (paper or digital photographs)
• Bank and credit card statements (to corroborate payments)
• Mileage log (for vehicle claims)
• Contracts and agreements (for professional fees)
• Screenshots of software subscriptions and automated charges
• Any correspondence demonstrating business purpose

HMRC can open an enquiry into your return within 12 months of the filing deadline. If selected for an extended enquiry, they can go back further — up to four years for innocent errors, six years for careless ones. Evidence that you cannot produce means the expense will be disallowed, and HMRC may charge additional tax plus an inaccuracy penalty.

Many self-employed people now use accounting software (FreeAgent, QuickBooks, Xero, Wave) that stores receipts alongside transactions. HMRC's Making Tax Digital for ITSA (applying to businesses with income over £50,000 from April 2026) requires MTD-compatible software anyway — adopting it early also simplifies record-keeping for current returns.

Worked example: Sarah's freelance design business

Profile: Sarah is a freelance graphic designer with a home studio. Her 2025/26 figures:

• Total income (invoices): £38,000
• Business use of own car: 4,200 miles at 45p = £1,890
• Working from home flat rate: 52 weeks × £6 = £312
• New laptop (used 80% for business): £1,062 × 80% = £850 (via AIA)
• Software (Adobe Creative Cloud, Figma, project management): £480
• Accountant fees (for this return): £600
• Adobe masterclass (advanced skills for her existing design work): £299
• Google Ads and LinkedIn Ads (client acquisition): £560

Total allowable expenses: £4,991

Taxable profit: £38,000 − £4,991 = £33,009

Tax saving at 20% basic rate: £998

Compared to declaring the full £38,000 without any expense claims, Sarah saves £998 in income tax by claiming these legitimate expenses. She also reduces her Class 4 NI liability (6% on profits between £12,570 and £50,270), saving a further roughly £299.

Total saving from correct expense claiming: approximately £1,297 — more than double the cost of her accountant's fee.

One item Sarah cannot claim: the £280 she spent on a new suit for a major client pitch. The suit is suitable for everyday wear and fails HMRC's "wholly and exclusively" test. She also cannot claim the £150 client dinner after the pitch — entertainment is explicitly prohibited.

What comes next in the series

Parts 5 through 8 of the UK Self Assessment From Scratch series cover:

• Part 5: Understanding your tax bill — payments on account, how HMRC calculates what you owe, and how to reduce payments on account if your income has dropped
• Part 6: Pension contributions and Gift Aid on self assessment — how to maximise relief
• Part 7: How to submit your return online — a screen-by-screen walkthrough
• Part 8: After you submit — amending errors, dealing with HMRC enquiries, and when to use an accountant

The most important takeaway from Part 4: do not under-claim. HMRC's system only knows what you tell it. Legitimate expenses you forget to claim mean you pay more tax than you legally owe — and you cannot go back more than 12 months after the filing deadline to amend a submitted return through the online system.