Twelve Expenses You're Probably Forgetting (and Three That'll Land You in Hot Water)

Every January, thousands of UK sole traders and small company owners sit down with a pile of receipts and claim roughly the same six things: stock, fuel, postage, a laptop, the accountant, and a sandwich they're fairly sure was business-related.

Which is a shame, because there's usually more relief available than people take. Not through anything clever or aggressive — just through claiming the ordinary costs that got overlooked because nobody mentioned them.

Below are twelve that come up again and again, and three that really don't.

The rule, in one short paragraph

An expense must be incurred wholly and exclusively for the purposes of your trade. If something has a personal element, you claim only the business share. That's it. Most disagreements with HMRC aren't about whether a cost was real — they're about whether it had a business purpose at all, or whether you claimed the whole thing when you should have claimed 60% of it.

One note on basis: most sole traders now use the cash basis by default, which means you record money in and money out rather than timing it around invoices. Cash basis doesn't stop you claiming equipment or vehicles, so nothing below is off the table.

The twelve you might be missing

1. Use of home. If you work from home, you can claim a flat monthly amount based on hours worked: £10 for 25–50 hours a month, £18 for 51–100 hours, £26 for 101 or more. No receipts, no spreadsheets. Sam, a candle maker in Bristol, works about 60 hours a month from a spare room — that's £216 a year, claimed in about thirty seconds. The alternative is apportioning actual bills by rooms and time, which often gives more but needs the workings to back it up.

2. Mileage. Using your own car for business journeys: 45p per mile for the first 10,000 miles, 25p after that. Motorcycles 24p, bicycles 20p. A Coventry-based IT contractor doing 8,000 client miles a year can claim £3,600 without keeping a single fuel receipt. The trap is claiming mileage and the running costs of the same vehicle — pick one method and stick to it.

3. Training that sharpens existing skills. A bookkeeper studying for a payroll qualification: allowable. A chippie retraining as a plumber: not allowable, because it's a new trade. The test is whether the learning updates what you already do or opens a door to something entirely different.

4. Memberships and subscriptions. Trade bodies, professional registers, industry magazines, technical journals. If it keeps you current in your field, it's usually fine.

5. Accountancy, software and admin. Fees for preparing your business accounts and tax return, cloud accounting subscriptions, stationery, postage, printer ink, that second monitor. All the unglamorous infrastructure.

6. Bank and card charges. Monthly account fees, card machine charges, Stripe and PayPal fees, foreign exchange costs on overseas clients. Easy to forget because they never arrive as an invoice — they just quietly leave your account every month.

7. Phone and broadband. Claim the business proportion. If three-quarters of your broadband use is work, claim three-quarters. Keep a note of how you arrived at the split.

8. Insurance beyond the obvious. Public liability, professional indemnity, business contents, tool cover, stock insurance. Not your personal life cover, and not your home insurance in full — only the business element.

9. Travel and overnight stays. Train fares, parking, congestion-free routes, hotel rooms and reasonable meals on overnight business trips. What you can't claim is the ordinary commute to a permanent workplace — that's personal travel wearing a business hat.

10. Marketing and your website. Ad spend, domain renewals, hosting, design work, printed flyers, branded workwear, the photographer who took your team photos. Small amounts, but they add up over a year.

11. Tools and equipment. Laptops, machinery, vans, tools. Most of it can be written off in full through the Annual Investment Allowance, which currently covers up to £1 million of qualifying spend. Cars are the exception and follow their own, less generous rules.

12. Costs from before you started trading. Up to seven years of pre-trading expenses, provided they'd have been allowable once the business was up and running. Market research, initial stock, website build, professional advice — all claimable if you kept the paperwork.

A few honourable mentions: bad debts (if you use the accruals basis), trade magazines, protective clothing, and client gifts up to £50 per recipient per year — as long as they carry your business branding somewhere conspicuous.

Three claims to steer well clear of

Client entertaining. Lunches, drinks, tickets, hospitality — none of it is deductible, and you can't reclaim the VAT either. This is one of the most commonly misunderstood rules in the book. Staff entertaining is a different matter: limited companies can typically claim up to £150 per head per year for a team event.

Fines and penalties. Parking tickets, speeding fines, late filing penalties, court fines. HMRC takes the view that a penalty for breaking the law isn't a cost of trading, and claiming one tends to invite a closer look at everything else on the return.

Everyday clothing and personal grooming. A suit you'd also wear to a wedding isn't a business expense, however often you wear it to client meetings. Branded uniforms and genuine protective gear are fine. Haircuts are not.

Grey areas worth a proper conversation

Pensions. For a sole trader, a personal pension contribution isn't a business expense — it gets relief through Self Assessment instead. For a limited company, employer pension contributions are usually allowable. Same money, different treatment, very different paperwork.

Home bills. The personal share of your electricity, mortgage interest or rent isn't deductible. Claim the business slice and be able to explain how you worked it out.

Personal spending through a company. If the company pays for something personal, it's not a business expense — it's usually a benefit in kind, and it needs reporting.

Keep the paper trail

Sole traders need to keep records for five years after the 31 January submission deadline for that tax year. Companies are looking at six years. If you're within scope of Making Tax Digital, those records need to be digital, which in practice means a bank feed and a sensible set of categories rather than a carrier bag in the cupboard.

And a small practical tip: write the business reason on the receipt. 'Client meeting, Coventry, project X' takes four seconds and answers a question two years later that you'd otherwise struggle to remember.

The bottom line

Claim what's genuinely there. Ignore anything you'd feel uneasy explaining. And if you're unsure whether something sits on the right side of the line, that's exactly the sort of question worth asking before you file, not after.