Ask most sole traders what their biggest expense is and they’ll usually know the answer immediately.
Ask them what expenses they can actually claim against tax, and things often get much quieter.
Every year, thousands of self-employed people pay more tax than necessary because they either:
- • don’t know what they can claim
- • don’t keep proper records
- • or assume an expense isn’t allowable when it actually is
The frustrating part is that many of the most commonly missed expenses are completely legitimate and fully accepted by HMRC.
For some businesses, claiming expenses correctly can reduce taxable profit by hundreds or even thousands of pounds every year.
The challenge is knowing what qualifies.
The Golden Rule HMRC Uses
Before diving into specific expenses, it’s worth understanding the basic principle.
HMRC generally allows expenses that are “wholly and exclusively for business purposes.”
In simple English: the expense must be genuinely related to running your business.
If something is partly business and partly personal, usually only the business element can be claimed.
This is where many sole traders either:
- • underclaim because they’re too cautious
- • or overclaim because they misunderstand the rules
Understanding the distinction is important.
Why Expenses Matter So Much
Tax is usually calculated on profit, not turnover.
Profit = Income − Expenses.
For example:
| Amount | |
|---|---|
| Income | £50,000 |
| Expenses | £10,000 |
| Taxable profit | £40,000 |
The more legitimate expenses you identify and record correctly, the lower your taxable profit becomes.
The Top 10 Expenses Sole Traders Forget Most Often
If there was a “most forgotten expenses” league table, these would be near the top.
1. Mobile phone costs
If you use your phone for business — client calls, emails, messaging, scheduling — you may be able to claim the business proportion of the bill.
Many sole traders never calculate this.
2. Broadband and internet
If your business relies on emails, video calls, cloud software or online banking, part of your internet costs may qualify.
3. Home office costs
Working from home creates allowable expenses such as:
- • electricity
- • heating
- • broadband
- • workspace costs
Many sole traders are surprised by how often they can legitimately claim something here.
4. Professional subscriptions
Memberships and subscriptions often qualify, including:
- • trade bodies
- • industry memberships
- • professional licences
- • specialist publications
5. Software
Modern businesses rely heavily on software. Common examples include:
- • accounting software
- • invoicing systems
- • design tools
- • project management software
- • cloud storage
These are frequently allowable.
6. Training and CPD
Certain business-related training costs can qualify, especially where the training maintains or updates existing skills.
7. Business mileage
One of the biggest missed opportunities.
Many sole traders forget journeys, estimate poorly, or fail to track mileage at all.
With the new 55p mileage rate, this has become even more valuable.
8. Equipment and tools
Depending on the business this might include:
- • laptops
- • monitors
- • power tools
- • cameras
- • specialist equipment
9. Insurance
Business insurance often qualifies, including:
- • public liability insurance
- • professional indemnity insurance
- • equipment cover
10. Bank charges
Business account fees and certain finance costs are commonly overlooked.
They may be small individually but often add up over a year.
Mileage: The Expense That Deserves Its Own Section
Mileage is worth highlighting because it is frequently both underclaimed and misunderstood.
Many sole traders drive thousands of business miles every year but fail to keep proper records.
Business mileage can include:
- • client visits
- • supplier trips
- • temporary workplaces
- • travel between work locations
It generally does not include ordinary commuting.
Even a modest amount of missed mileage can cost hundreds of pounds annually.
Home Working: The Expense Everyone Asks About
Since remote working became more common, home office expenses have become one of the most searched tax topics.
Common questions include:
- • Can I claim electricity?
- • Can I claim part of my rent?
- • What about council tax?
- • Can I claim broadband?
The answer depends on:
- • how often you work from home
- • how much of the home is used for business
- • which simplified or actual cost method you use
This area deserves proper record-keeping because mistakes can occur both ways.
The Expenses That Usually Don’t Qualify
A useful exercise is understanding what generally cannot be claimed.
Everyday clothing
Even if worn at work. A suit worn for client meetings is normally not allowable. Protective clothing and uniforms are different.
Personal meals
Simply buying lunch during the working day is usually not a business expense.
Personal shopping
This sounds obvious, but business and personal spending become mixed surprisingly often in small businesses.
Why Poor Record-Keeping Costs More Than Most People Realise
The biggest reason people miss expenses isn’t tax knowledge. It’s record keeping.
Many sole traders still:
- • lose receipts
- • rely on memory
- • update records once a year
- • reconstruct expenses at tax return time
This creates two problems:
Missed expenses
The obvious issue.
Stress
Trying to rebuild a year’s worth of costs in January is nobody’s idea of a good time.
How Making Tax Digital Changes Things
With Making Tax Digital (MTD) approaching, expense tracking becomes even more important.
The system is moving towards:
- • digital records
- • regular bookkeeping
- • quarterly updates
That means expense management will increasingly become an ongoing process rather than an annual panic.
Businesses that already keep organised records will find the transition much easier.
The Hidden Cost of Not Claiming Expenses
When people think about tax savings, they often focus on complex planning strategies.
In reality, the biggest savings are often much simpler. They’re hiding in:
- • forgotten mileage
- • missed subscriptions
- • unclaimed home office costs
- • overlooked software expenses
A sole trader who consistently misses legitimate expenses can easily end up paying hundreds, and sometimes thousands, more tax than necessary over time.
Not because tax rates changed. Not because HMRC made a mistake.
Simply because the expenses were never claimed.
Summary
Sole traders pay tax on profit, not turnover.
That means claiming legitimate business expenses is one of the simplest and most effective ways to reduce a tax bill legally.
The most commonly overlooked expenses include:
- • mileage
- • phone costs
- • broadband
- • home office expenses
- • software subscriptions
- • training
- • insurance
- • professional memberships
The key is maintaining accurate records throughout the year rather than trying to reconstruct everything at the last minute.
As Making Tax Digital approaches and bookkeeping becomes increasingly digital, businesses that build good expense-tracking habits now are likely to save both money and stress in the years ahead.