Self-Employed Expenses You CANNOT Claim: 12 Costly Mistakes (2026/27)
Knowing what you can claim is only half the battle. Claiming things you cannot, from your work suit to your lunch to your commute, is what triggers HMRC enquiries and penalties. Here are 12 expense mistakes sole traders make in 2026/27 and what the rules actually say.
Most self-employed people focus on claiming as much as possible, and rightly so: every genuine business cost cuts your tax bill. But the bigger risk is claiming the wrong things. Over-claiming is exactly what HMRC enquiries look for, and a disallowed expense means back-tax, interest and possibly a penalty. The golden rule for sole traders is that a cost must be incurred "wholly and exclusively" for the purposes of your trade. Here are 12 common mistakes that fail that test in 2026/27.
1. Your everyday work clothes
A common myth is that anything you wear only for work is claimable. It is not. Ordinary clothing, a suit, smart shoes, a plain shirt or a dress, cannot be claimed even if you bought it solely for client meetings. HMRC's view, backed by case law, is that everyday clothes also provide warmth and decency, so they fail the "wholly and exclusively" test. Only protective clothing, branded uniforms and performers' costumes qualify.
2. Lunch on a normal working day
You cannot claim the sandwich you buy near your usual workplace. Everyone has to eat, so routine meals are personal, not business. The exception is genuine subsistence when you travel away from your normal base on business, for example an overnight trip or a journey to a one-off location. Keep those receipts, but leave the daily lunch off your return.
3. Your commute from home to a regular workplace
Travel between home and a fixed, regular place of work is ordinary commuting and is never allowable, just as it is not for employees. You can claim travel to temporary workplaces, client sites and meetings, and mileage at 45p per mile for the first 10,000 business miles in your own car. But the journey to the same office or unit every day does not count.
4. The full cost of a car used personally too
If you use a vehicle for both business and private journeys, you can only claim the business proportion. Claiming the whole running cost, or the whole purchase price as an expense, is wrong. Most sole traders use simplified mileage at 45p per mile (then 25p above 10,000 miles), which already bundles in running costs. You cannot claim mileage and the actual running costs for the same vehicle.
5. Personal use of your phone and broadband
Your mobile and home internet almost always have a private element. You can only claim the business-use percentage. Claiming 100% of a contract you also use for personal calls, streaming and browsing is a classic error. Estimate a fair business proportion and keep a note of how you reached it.
6. Fines and penalties
Parking fines, speeding tickets and HMRC late-payment penalties are never allowable, no matter how the cost arose. The law specifically blocks tax relief for penalties for breaking the law. A legitimate parking charge in a car park during a business trip is fine; a penalty notice is not.
7. Client entertaining
Taking a client to lunch, the football or a show is business entertaining, and business entertaining is specifically disallowed for tax. You can still pay for it from your business, but you cannot deduct it from your taxable profit. Staff entertaining has limited reliefs, but for a sole trader with no employees, client entertaining simply does not reduce your tax bill.
8. The whole of a mixed-purpose trip
If you tack a few business meetings onto a holiday, you cannot claim the trip as a business expense. The "wholly and exclusively" rule means a cost with a significant private purpose fails entirely. Genuine, separable business costs within a trip may be claimable, but a holiday with some work in it is not a business trip.
9. Drawings and your own wages
As a sole trader you and the business are the same legal person. Money you take out for yourself is "drawings", not a business expense. You cannot pay yourself a wage and deduct it. Your tax is calculated on the profit of the business, before you take any drawings. This is one of the most misunderstood points for people moving from employment.
10. Repaying the capital part of a loan
If you take a business loan, the interest is usually allowable, but the repayment of the capital you borrowed is not. Repaying borrowed money is not a business cost, it is returning money you owe. Only the interest and genuine finance charges reduce your taxable profit.
11. The full cost of a new laptop or van as a "purchase"
Equipment that lasts, like a laptop, tools or a van, is capital, not a running cost. You usually claim it through capital allowances, most often the Annual Investment Allowance, which gives 100% relief up to 1,000,000 pounds a year. The relief is generous, but you claim it in the capital allowances section, not as a normal expense, and only for the business-use proportion. Treating capital items as ordinary expenses is a common categorisation error.
12. Anything you cannot evidence
Even a genuinely allowable cost can be disallowed if you cannot prove it. "I definitely spent about 2,000 pounds on materials" is not a record. If HMRC asks and you have no invoice, receipt or bank entry, the deduction can be refused. Keep digital copies of receipts, especially with Making Tax Digital for Income Tax requiring digital records for higher-income traders from April 2026.
What you CAN claim, for balance
To be clear, plenty is allowable when it is wholly and exclusively for the business:
| Allowable | Not allowable |
|---|---|
| Branded uniform or protective clothing | Everyday suits and shoes |
| Subsistence on genuine business trips | Daily lunch near your base |
| Travel to client sites and temporary workplaces | Home-to-regular-workplace commute |
| Business proportion of phone and broadband | 100% of a mixed-use contract |
| Loan interest | Loan capital repayments |
| Equipment via capital allowances | Equipment claimed as everyday expense |
How to stay safe
The "wholly and exclusively" test is your compass. Before claiming anything, ask whether the cost was incurred purely for the business. If there is a meaningful private benefit, either apportion it fairly or leave it out. Keep evidence for everything, record costs as they happen rather than reconstructing them in January, and when a cost sits in a grey area, take advice rather than assuming HMRC will agree with you.
Getting this right is not about claiming less, it is about claiming correctly. A clean, defensible return with only genuine costs will always beat an aggressive one that invites an enquiry.
Frequently asked questions
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