Running your own business is rewarding, but it comes with a tax bill — and one of the most effective ways to reduce that bill is to make sure you are claiming every expense you are entitled to. Yet many sole traders in North Devon and beyond leave money on the table simply because they are not sure what counts as an allowable expense, or they are nervous about claiming something they are unsure of.

This guide covers the main categories HMRC allows, what you can and cannot claim within each one, and a few practical tips to keep your records in good shape.

What Makes an Expense "Allowable"?

HMRC's golden rule is straightforward: an expense is allowable if it is incurred "wholly and exclusively" for the purposes of your business. That means if you buy something purely for work, you can claim the full cost. If something has a mix of personal and business use, you can only claim the business portion — and you need to be able to justify how you have split it.

It is worth knowing that "allowable" does not mean HMRC will never question it. It means you have a legitimate basis for the claim. Good records are what protect you if they do.

Mileage and Travel Costs

If you use your own car, van, or motorcycle for business journeys, you can claim mileage at HMRC's approved rates rather than trying to work out the actual running costs. For 2026/27 those rates are:

• Cars and vans: 45p per mile for the first 10,000 miles, then 25p per mile
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

The key word here is business journeys. Your regular commute from home to a fixed place of work does not count. But travelling to visit a client, attending a training course, or driving to collect supplies all qualify.

You will need to keep a mileage log — the date, destination, purpose, and miles covered for each journey. A simple spreadsheet or a mileage tracking app works well. Without a log, HMRC can reject the claim entirely, even if the journeys genuinely happened.

If you travel by public transport, you can claim the actual cost of train, bus, or taxi fares for business trips. Overnight stays for business purposes — hotel costs and reasonable subsistence — are also allowable.

Home Office Costs

Working from home is increasingly common, and HMRC does allow you to claim a proportion of your household costs as a business expense. There are two ways to do this.

The simplified flat rate is the easiest option. HMRC sets fixed monthly amounts based on how many hours per month you work from home:

• 25–50 hours: £10 per month
• 51–100 hours: £18 per month
• 101 hours or more: £26 per month

It is not a huge amount, but it requires no calculation and no records beyond your hours.

The actual cost method involves working out the business proportion of your home running costs — mortgage interest or rent, council tax, utilities, broadband — based on the number of rooms used for business and the hours you use them. This can produce a larger claim, but it requires more careful record-keeping.

One important point: the capital gains tax risk that is sometimes mentioned in connection with home office claims only applies if you use a room exclusively for business — meaning no personal use whatsoever. In practice, most sole traders use a spare bedroom or a corner of the kitchen table, which has a dual purpose, so there is no CGT issue at all. If you are in any doubt about your specific situation, it is worth a quick conversation with us before you decide which method to use.

If you rent a separate office or workspace outside your home, the full cost of that rent is allowable without any of these complications.

Equipment and Technology

Any equipment you buy purely for business use can be claimed as a capital allowance — and for most small businesses, the Annual Investment Allowance means you can deduct the full cost in the year you buy it rather than spreading it over several years.

Common examples include:

• Computers, laptops, tablets, and monitors
• Printers and office furniture
• Tools and specialist equipment for your trade
• Cameras or recording equipment if used for your work
• Mobile phones (the business-use portion)

If you use a piece of equipment for both business and personal purposes — a laptop you also use for personal browsing, for example — you can only claim the business-use proportion. Keep a note of how you have arrived at that split.

Software subscriptions used for your business — accounting software, design tools, project management platforms — are also fully claimable as a revenue expense.

Professional Fees and Subscriptions

Fees paid to professionals for business purposes are allowable. This includes:

• Accountancy and bookkeeping fees
• Legal fees related to your business (not personal matters)
• Professional indemnity or public liability insurance
• Membership fees for professional bodies relevant to your trade

If you are a member of a trade association or professional body that is directly relevant to your work, the annual subscription is claimable. General professional development courses that maintain or improve skills you already use in your business are also allowable — though courses that qualify you for a new profession are not.

Marketing and Advertising

Any money you spend promoting your business is generally allowable. This covers:

• Website costs, including hosting and domain registration
• Online advertising (Google Ads, social media ads)
• Printed materials — flyers, business cards, brochures
• Sponsorship of local events, if there is a clear business purpose

If you run a social media account purely for your business, the costs associated with it — scheduling tools, stock images, design software — are claimable too.

Stock, Materials, and Subcontractors

If your business involves buying goods to resell, or materials to complete a job, those costs are allowable in full. The same applies to payments made to subcontractors or freelancers who carry out work on your behalf.

Keep invoices and receipts for everything. For subcontractors, make sure you have a clear record of what work was done and when — HMRC pays particular attention to subcontractor payments.

Phone and Broadband

If you have a dedicated business phone line or mobile contract, the full cost is allowable. If you use a personal contract for both business and personal calls, you can claim the business proportion — typically based on your call records or a reasonable estimate.

Broadband is similar. If your home broadband is used for both personal and business purposes, you can claim the business-use proportion. If you have a separate broadband connection purely for business, the full cost is claimable.

What You Cannot Claim

It is just as important to know what HMRC will not allow:

• Client entertaining — taking a client out for lunch or drinks is not allowable, even if it is genuinely for business purposes. This is one of HMRC's firm rules.
• Clothing — unless it is a uniform, protective clothing, or a costume required for your work, everyday clothing is not claimable even if you only wear it for work.
• Fines and penalties — parking fines, HMRC penalties, and similar costs are not allowable.
• Personal expenses — anything with a personal element that cannot be clearly separated out.

A Note on Record Keeping

Claiming the right expenses is only half the job. The other half is keeping the evidence to back up those claims. HMRC can ask you to produce receipts and records for up to five years after the filing deadline for a given tax year, so it is worth having a system in place from day one.

A separate business bank account, receipts photographed and stored digitally as soon as you receive them, and accounting software to categorise everything as you go will make your self-assessment return far less stressful — and give you confidence that your figures are right.

Not Sure What You Can Claim?

If you are unsure whether a particular expense qualifies, or you want to make sure you are not missing anything, that is exactly the kind of conversation we have with clients regularly. Getting your expenses right can make a meaningful difference to your tax bill — and it is much easier to sort out with a bit of guidance than to unpick later.

Get in touch with us at Tarka Accounts — we work with sole traders across North Devon and would be happy to help you get on top of your finances.