Allowable expenses for sole traders: what Orpington and Chislehurst self-employed people can claim

Every pound of allowable expense you claim reduces your taxable profit, which means less Income Tax and National Insurance. Yet many self-employed people across Orpington, Chislehurst, Bromley and Swanley either miss costs they're entitled to or claim things they shouldn't. With Making Tax Digital now asking many sole traders to categorise expenses every quarter, getting this right matters more than ever.

The basic rule: "wholly and exclusively"

An expense is generally allowable if you incur it wholly and exclusively for your business. Where a cost is partly personal, such as your phone, car or home, you can usually claim the business proportion, provided you can show a reasonable basis for the split.

Two things are never allowable: your own drawings (the money you take out for yourself) and personal living costs, even if you work long hours.

Common allowable expenses

• Office, property and equipment costs: rent for a workshop or unit, business rates, repairs, and phones and broadband (business share).
• Stock and materials: goods you resell and materials used in jobs.
• Travel: fuel or mileage for business journeys, parking, trains, and hotels on business trips. Your normal commute to a permanent workplace doesn't count.
• Staff costs: wages, employer pension contributions and subcontractor payments.
• Financial costs: bank charges, card fees and interest on business loans (with some limits).
• Professional fees: accountancy, legal fees for business matters, and professional indemnity insurance.
• Marketing: your website, online advertising and printed leaflets. Entertaining clients is not allowable.
• Software and subscriptions: Xero or other accounting software, MTD bridging tools and trade body memberships relevant to your work.
• Clothing: uniforms, protective clothing and costumes. Everyday clothes, even if you only wear them for work, are not allowable.

Vehicle costs: mileage has just gone up

You can claim motoring costs in one of two ways. The first is the actual costs method, where you claim the business share of fuel, insurance, repairs and so on, plus capital allowances on the vehicle. The second is simplified mileage rates.

For 2026/27, the government has increased the simplified rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles, backdated to 6 April 2026. The rate stays at 25p per mile after 10,000 miles. If you drive between jobs around Orpington, Bromley and into central London, this could make a noticeable difference.

Once you've picked a method for a vehicle, you must keep using it for as long as you use that vehicle in the business, so choose carefully. The new rate was due to be confirmed in legislation, and the government has said it will set out its review of mileage rates at the 28 October Budget. We'll confirm the final position after that.

Working from home

If you run your business from home, you can claim a reasonable share of household costs based on rooms and time used. Alternatively, you can use HMRC's simplified flat rates, which depend on the hours you work at home each month:

• 25 to 50 hours: £10 a month
• 51 to 100 hours: £18 a month
• 101 hours or more: £26 a month

The flat rate doesn't include phone and broadband, which you claim separately for the business share.

The £1,000 trading allowance

If your gross self-employed income is small, say from a side business, you may be able to use the £1,000 trading allowance instead of claiming actual expenses. For most established sole traders, real expenses are higher than £1,000, so claiming them is better. You can't use both for the same income.

Bigger purchases

Equipment, tools, computers and vans are usually claimed through capital allowances. Most small businesses can claim the full cost in the year of purchase through the Annual Investment Allowance. Under the cash basis, which has been the default for most sole traders since April 2024, many equipment purchases can simply be deducted as an expense. Cars are treated differently, so ask before you buy.

Keep the evidence

Snap receipts into your accounting app as you go. Digital records are easier to keep than a shoebox, and under Making Tax Digital they're a legal requirement for many sole traders. HMRC can ask to see evidence for your claims, and you should normally keep records for at least five years after the 31 January filing deadline for that tax year.

Frequently asked questions

Can I claim my mobile phone?

Yes, the business proportion of your bill. If the contract is in your name and used for both, work out a sensible split, for example from an itemised bill.

Can I claim lunch while I'm working?

Usually not. Everyday meals are personal. Reasonable meal costs on genuine business trips away from your normal place of work can be claimed in certain circumstances.

What if I forgot to claim something last year?

You can normally amend a Self Assessment return within 12 months of the 31 January filing deadline. Older claims are sometimes possible through overpayment relief. Speak to us before doing either.

Make sure you're claiming everything

Muftals is a chartered firm in Chislehurst, and our team holds ACCA and CIMA qualifications. We look after sole traders across Orpington, Bromley and the BR postcodes, from bookkeeping to MTD quarterly updates and your tax return. Book a free first call on 020 7078 7546 (Monday to Friday, 9am to 5:30pm) or contact us online.

Rates correct as at 20 October 2026. This is general information, not personal advice.