As a UK sole trader, you can deduct business expenses from your income before calculating how much tax you owe. Every pound you legitimately claim reduces your taxable profit — which means less Income Tax and less Class 4 National Insurance.
The rule HMRC uses is straightforward: expenses must be "wholly and exclusively" for business purposes. In practice, this covers a wide range of costs that many sole traders simply don't claim.
Quick example: If you earn £40,000 and have £8,000 in allowable expenses, you only pay tax on £32,000. At the basic rate, that's a saving of £1,600 — plus National Insurance on top.
Office and admin costs
If you work from a dedicated office or workspace, you can claim:
- Rent or mortgage interest (proportional to business use)
- Business rates, utilities, and insurance for the space
- Office supplies — stationery, printer ink, postage
- Business phone calls and a proportion of your broadband
- Software subscriptions used for work
Working from home
If you work from home for at least 25 hours a month, HMRC offers two routes:
Flat rate (simplified expenses)
HMRC's flat rate is a monthly amount based on hours worked from home — no receipts needed, no calculation required.
| Hours worked from home per month | Flat rate |
|---|---|
| 25 to 50 | £10/month |
| 51 to 100 | £18/month |
| 101 or more | £26/month |
Actual costs method
You calculate the business proportion of your actual household bills — broadband, electricity, gas, council tax. This can be significantly higher than the flat rate if you have a large home or high bills, but requires more record-keeping.
Nuxo tip: For full-time home workers, the flat rate gives you £312/year (£26 × 12) with zero admin. Use it unless your actual business-proportion costs are clearly higher.
Travel and mileage
Business travel is one of the most commonly missed deductions. You can claim:
- Mileage at HMRC-approved rates (see table below)
- Public transport for business trips
- Parking, tolls, and congestion charges
- Accommodation and meals for overnight business trips
| Vehicle | First 10,000 miles | Over 10,000 miles |
|---|---|---|
| Car or van | 45p per mile | 25p per mile |
| Motorcycle | 24p per mile | 24p per mile |
| Bicycle | 20p per mile | 20p per mile |
Note: if you claim mileage, you cannot also claim actual vehicle costs (fuel, insurance, servicing). Pick one method and stick to it.
HMRC's simplified expenses scheme officially covers cars, goods vehicles, and motorcycles only. Sole traders cycling for business typically claim actual costs or use the AMAP-equivalent 20p/mile rate above.
Equipment and technology
Business equipment is fully deductible under the Annual Investment Allowance (AIA), meaning you can claim the full cost in the year of purchase:
- Laptops, computers, monitors, and peripherals
- Phones (business proportion)
- Cameras, tools, and trade equipment
- Desks, chairs, and office furniture
Professional fees and training
- Accountancy and bookkeeping fees
- Legal fees directly related to your business
- Professional memberships and subscriptions
- Training courses that develop existing skills (not new trades)
Important: HMRC allows training that improves your existing skills — not courses to enter a completely new profession. A web designer learning a new coding language: ✓. A web designer doing a nursing qualification: ✗.
Marketing and business development
- Website costs — hosting, design, domain registration
- Advertising — Google Ads, social media, print
- Business cards and branded materials
- Gifts to clients (up to £50 per person, per year, not food/drink)
What you cannot claim
HMRC is clear on costs that are not deductible:
- Personal clothing (unless it's a uniform or protective gear)
- Commuting between home and a regular workplace
- Client entertaining (meals, events, hospitality)
- Fines and penalties
- Personal expenses with no business connection
Keep your records
HMRC can ask to see evidence of any expense claim for up to 5 years after your Self Assessment deadline. You don't need to send receipts when you file — but you need to have them if asked.
The simplest approach: photograph receipts as you spend, categorise as you go, and let the records build themselves. That's exactly what Nuxo does automatically.