Allowable expenses (2026/27)
The HMRC-accepted categories you can deduct from profit, plus the simplified-expenses shortcut.
Overview
If you're self-employed, your tax bill is calculated on profit (income minus allowable expenses), not gross income. Claiming everything HMRC permits is the single biggest legal lever on your tax bill - every £1,000 of expenses saves £200–£420 depending on your marginal rate.
Quick reference: a fuller, worked-example version of this guide is in development. The figures below are accurate for 2026/27 as of the last build.
Key facts
| Trading allowance | First £1,000 of self-employed income is tax-free; you can claim either the £1,000 allowance OR actual expenses, not both. |
|---|---|
| Simplified expenses | Flat-rate alternative for vehicles, working from home, and living in business premises. Optional. |
| Mileage rates (cars) | 45p/mile for the first 10,000 business miles, 25p/mile thereafter |
Categories HMRC accepts
- Office costs - stationery, phone, broadband, postage, business software.
- Travel - fuel, parking, train and bus fares, mileage at HMRC rates. Commuting from home to a regular workplace doesn't count.
- Clothing - uniforms, protective gear, costumes for actors. Everyday clothes don't count even if you only wear them for work.
- Staff and subcontractor costs - wages, employer NI, freelancer invoices.
- Stock and raw materials - anything you buy to sell on or use in delivering your service.
- Financial costs - bank charges, business loan interest, insurance.
- Premises - rent, heating, lighting, business rates, security. If you work from home, claim a proportion or use the simplified flat rate.
- Advertising and marketing - website, paid ads, business cards, sample products.
- Training - courses that update existing skills count. Courses that build a new skill set generally don't.
- Professional fees - accountant, solicitor, professional body subscriptions.
The simplified-expenses option
HMRC publishes flat rates that let you skip the receipt-arithmetic for three categories where the actuals are fiddly:
- Vehicles - pence-per-mile instead of fuel + insurance + servicing apportionment.
- Working from home - £10/£18/£26 a month depending on hours worked from home (25–50 / 51–100 / 101+ hours).
- Living in business premises - flat-rate non-business use deduction.
You can mix simplified and actual expenses across categories. Use whichever gives the bigger deduction in each.
What's not deductible
- Personal expenses, even if you spend them while working (e.g. a coffee on the way to a client meeting).
- Client entertainment - almost never deductible. Staff entertainment is, up to limits.
- Fines, parking tickets, late-payment penalties.
- The personal-use proportion of any mixed-use cost (phone, car, internet).
Sources
Related guides
- Class 2 and Class 4 National Insurance - full rates, thresholds and payment dates.
- Sole trader vs limited company - which structure pays less UK tax, with worked examples at £30k, £50k and £80k profit.
- Reduce your tax bill legally - the HMRC-approved levers, ordered by how much they actually move the bill.
- Payments on account - HMRC's advance-tax mechanism explained, with the January and July payment cycle.
- Self Assessment deadlines - Every Self Assessment deadline that lands during the 2026/27 tax year, and the penalties for missing each.
Or run the numbers for your own profit level: £50,000 self-employed, £75,000 self-employed, or browse all bracket pages.