☕ Accounting Espresso #2 Sole Trader Expenses: What You Can (and Can’t) Deduct in 2025

Your Monday dose of clear, practical insights for UK sole traders and small limited companies. Taxes explained. Deadlines decoded. Strategy served short and strong — just like a good espresso.

If you've ever wondered: "Can I deduct my phone bill? Canva Pro? That train ticket to a networking event?" — this one's for you.

In this blog, we're breaking down what you can and can’t deduct as a sole trader in the UK for the 2025–26 tax year.

🔢 What counts as an allowable expense?

HMRC allows you to deduct costs that are 100% business-related. These are called allowable expenses. They reduce your taxable income and therefore your tax bill.

The rule is: if you wouldn't have spent the money without the business, it's probably allowable.

✅ What you CAN deduct

1. Office & Tools

• Laptop, printer, cables, monitor

• Canva Pro, Adobe Suite, Notion, Google Drive

• A portion of rent or bills if working from home

2. Marketing & Online Presence

• Facebook/Instagram/Google Ads

• Website domain and hosting

• Business cards, branding design, digital subscriptions

3. Travel for Business

• Train tickets for client meetings

• Petrol for business mileage

• Hotel for business events or workshops

4. Staff & Contractors

• Freelancers and subcontractors

• Part-time employee wages

• Employer pension contributions

5. Training (only if it's related to your current business)

• Online courses to improve your services

• Industry workshops

6. Admin & Finance

• Accountant or bookkeeper fees

• Business bank charges

• Accounting or invoicing software

  
  

❌ What you CAN’T deduct

Some expenses feel businessy, but HMRC sees them as personal:

• Meals and drinks with clients (entertainment = not allowed)

• Clothing (unless it's a uniform or safety gear)

• Medical costs, even if work-related (e.g. physio, eye tests)

• Courses to switch career or start a new business

• Fines or penalties (late submissions, traffic tickets)

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📅 How to keep it all organised

• Use digital tools like QuickBooks, FreeAgent, Xero

• Log receipts digitally and store them for at least 5 years

• Record all travel details for mileage claims

• Reconcile your bank accounts regularly

📈 Final word

Knowing what you can and can’t claim keeps your tax bill low — and your records clean.

If you're not sure whether a cost is deductible: ask. It's better to get clarity now than face questions from HMRC later.

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