Start with the rule that decides everything

As a sole trader, you are taxed on your profits, not on your turnover. That single fact is why allowable expenses matter so much: every legitimate business cost reduces the profit figure that the tax is calculated on. Spend £200 on a new printer for the business and, broadly speaking, that £200 comes off your taxable profit rather than out of your own pocket alone.

The test that applies to almost every claim is the phrase wholly and exclusively for the purposes of the trade. If a cost was incurred purely to run your business, it is usually allowable. If it was partly personal, you can normally only claim the business proportion. Get comfortable with that principle and most of the judgement calls become straightforward.

Everyday running costs you can usually claim

Plenty of small, recurring costs are clearly allowable, and they add up quickly over a year. Keep a record of each one as it happens rather than trying to reconstruct twelve months of spending in January.

• Office supplies: stationery, printer ink, paper, postage, and small items of equipment you use for the business.
• Phone and internet: claim the business share of your bills. If you use a home line for both work and family calls, a reasonable business percentage is fine.
• Software and subscriptions: accounting tools, design packages, cloud storage, industry memberships and trade body fees.
• Professional fees: accountancy, bookkeeping, legal advice connected with the business, and bank charges on a business account.
• Insurance: public liability, professional indemnity, tool cover and business-specific policies.
• Marketing: website hosting, domain names, printed flyers, advertising and paid social posts.
• Training: courses that update or sharpen skills you already use in your trade. Training that qualifies you for a brand new trade is not allowable.

Travel, vehicles and the mileage shortcut

Ordinary commuting between home and a permanent workplace is not allowable, but travel to see clients, visit a supplier, attend a trade show, or move between temporary sites usually is. Overnight subsistence and accommodation on business trips can be claimed too, provided the cost is reasonable.

For vehicles, most sole traders find the simplified mileage rates far easier than tracking every fuel receipt, MOT and repair. Using them, you claim a flat amount per business mile:

• 45p per mile for the first 10,000 miles in a car or van in the tax year
• 25p per mile for every mile after that
• 24p per mile for motorcycles, and 20p per mile for bicycles

Parking at a client's site and congestion charges on business journeys are claimable. Parking fines, speeding penalties and driving licence costs are not, and neither is the cost of getting yourself to your normal place of work.

Working from home without overcomplicating it

If you run your business from home, you can claim a share of the running costs — heating, electricity, water, broadband and council tax. You have two sensible options.

The first is the flat rate method, based on hours worked from home each month: £10 for 25 to 50 hours, £18 for 51 to 100 hours, and £26 for 101 hours or more. There is no need to keep utility bills for the claim itself, though you still need to show the hours are genuine.

The second is to work out the business proportion of your actual household bills, usually by rooms used and time spent. It often produces a larger claim, but you need the paperwork to back it up. Choose one method and stick with it consistently — and remember that if you claim the flat rate for home costs, you cannot also claim a proportion of the same bills.

Keeping evidence that will stand up

Good records are not about paperwork for its own sake; they are what lets you defend a claim calmly if anyone ever asks. A few habits make the whole thing painless.

• Keep every receipt. Photograph paper receipts the same day and store them in dated folders online. Thermal receipts fade to blank within months.
• Log the business purpose. A note such as "client meeting, Manchester" against a train fare takes seconds and answers the obvious question later.
• Separate your money. A dedicated business bank account, even a basic one, turns a shoebox of receipts into a clean list of transactions.
• Record mileage as you go. A note of date, destination, purpose and miles beats trying to remember journeys from eleven months ago.
• Keep records for at least five years after the 31 January filing deadline for the tax year in question.

Costs that catch people out

A handful of areas cause most of the confusion, so it is worth knowing them before you claim.

• Client entertaining. Taking a customer out for lunch is generally not allowable for a sole trader, even though it feels like a business cost. Staff entertaining is treated differently.
• Clothing. Everyday suits, shoes and coats are not allowable. Uniforms, protective clothing and costumes for a performance usually are.
• Personal use. If you use something for both business and pleasure, claim only the business share and be able to explain how you worked it out.
• Bigger purchases. Laptops, machinery and vehicles are usually treated as capital items rather than everyday expenses. They are still relieved, but through capital allowances or, in many cases under the cash basis, simply deducted like any other cost. It is worth checking before you decide.

None of this needs to be daunting. Claim what genuinely belongs to the business, keep a tidy trail of evidence, and if a cost feels borderline, write down why you thought it qualified. That note is often worth more than the receipt itself — and if you are ever unsure, a quick word with an accountant before you file is money well spent.