If tax feels like trying to assemble flat-pack furniture with no instructions, you are in good company.
Most sole traders do not struggle because they are careless. They struggle because HMRC language can feel like it was written for robots.
This guide translates the rules into normal English, so you can claim what is allowed, avoid what is not, and stay calm.
TL;DR (Key Takeaway)
- You can usually claim costs that are wholly and exclusively for business.
- You cannot claim personal spending disguised as business costs.
- Mixed costs (business + personal) can be claimed for the business part only.
- Good records matter more than perfect spreadsheets.
- Under Making Tax Digital for Income Tax Self Assessment (MTD ITSA), digital record-keeping is mandatory when you are in scope.
First, What HMRC Means by "Wholly and Exclusively"
HM Revenue and Customs (HMRC) uses one core test:
Is this expense only for running your business?
If yes, it is usually allowable. If it is partly personal, you can only claim the business portion.
Think of it like a pizza bill at a shared table. You can claim your slices, not everyone else's.
Common Sole Trader Expenses You Can Usually Claim
1. Office and admin costs
- stationery
- postage
- printer ink
- business software subscriptions
- business phone and internet portion
2. Travel costs for business journeys
- fuel or mileage (depending on method)
- train, bus, taxi fares for business trips
- parking and tolls for business travel
- hotel stays for business trips
Commuting to your normal place of work is usually not allowable.
3. Staff and subcontractor costs
- salaries (if you employ someone)
- subcontractor fees
- employer National Insurance contributions
4. Cost of goods for resale or use
- stock
- raw materials
- direct production costs
5. Premises costs
- business rent
- utilities for business premises
- business rates
If you work from home, you can claim the business-use element.
6. Financial and legal costs
- accountant fees
- professional indemnity insurance
- bank charges on business accounts
- legal fees related to business operations
7. Marketing and sales
- website hosting
- domain names
- ads
- social media promotion
- business cards
8. Training
Training is usually allowable if it updates existing business skills. Training to start a brand new trade is usually not.
Expenses You Usually Cannot Claim
- personal shopping
- everyday clothing (even if worn for work)
- personal travel
- fines and penalties
- client entertainment as a tax-deductible business expense
If you would buy it anyway even without the business, be careful.
Mixed Expenses: How to Split Them Simply
Some costs are mixed. Classic examples:
- phone bill used for business and personal calls
- home broadband used for business and family streaming
- working-from-home utilities
Rule of thumb: claim a fair, evidence-based business portion.
Example:
- Monthly phone bill: GBP40
- Estimated business use: 60%
- Claim: GBP24
Keep a short note on how you calculated it. HMRC likes clear logic.
Simplified Expenses vs Actual Costs
For some categories, HMRC allows simplified expenses (flat-rate methods), such as mileage and working from home.
This can reduce admin because you do not track every micro-cost.
If your business is simple, simplified methods can feel like switching from a 200-button remote to one big "play" button.
Records You Should Keep (Without Going Full Accountant Mode)
Keep digital records of:
- what you spent
- when you spent it
- what it was for
- amount
- supplier or payee
Useful proof:
- receipts
- invoices
- bank transactions
- mileage logs (if relevant)
Under MTD ITSA, digital records are essential, not optional, once you are mandated.
Fast Checklist Before You Claim
Ask these 5 questions:
- Is this for business?
- Is any part personal?
- Do I have evidence?
- Is my split method fair and consistent?
- Can I explain this in one sentence if HMRC asks?
If you can answer yes to all five, you are usually on solid ground.
Why Simplicity Wins
Most sole traders do not need a giant accounting suite with payroll dashboards, inventory engines, and 40 reports.
They need:
- clear records
- clean categories
- regular habits
- easy MTD readiness
That is the difference between doing tax once in panic mode and doing it calmly in small steps.
Final Word
Claiming expenses is not about being aggressive. It is about being accurate.
Claim what you are entitled to. Do not claim what you are not. Keep records as you go.
Simple beats clever every time.
Ready to Keep Expense Tracking Simple?
Cuppa helps UK sole traders track income and expenses clearly, stay MTD-ready, and avoid accounting overload: cuppa.tax