Know what counts as a business expense 

A business expense is any cost you incur wholly and exclusively for the purpose of running your business. It doesn’t have to be a physical item - it could be software, rent, mileage, or services.

Common expenses include:

• Office supplies (e.g. paper, pens, printer ink)

• Phone and internet used for business

• Travel costs to client sites (excluding normal commuting)

• Business-related insurance policies

• Marketing and advertising (website, social media ads)

• Accountancy fees

• Equipment like laptops or tools

• Business portion of utility bills if you work from home

If it’s mixed-use (personal and business), the rules can be a little bit trickier and you can only claim the business proportion. HMRC expects you to be reasonable and consistent with how you split it.

At Go Cloud Accounting, we regularly advise sole traders on what they can and can’t claim. We also help set up systems so you don’t miss anything or claim something you shouldn’t. 

Keep accurate records from day one

You need to keep evidence of everything you claim. This means:

• Invoices and receipts (physical or digital)

• Bank statements or proof of payment

• Mileage logs for travel

• Notes on how you split business vs personal use (e.g. 60% of phone use)

You don’t need to submit receipts with your tax return, but you must keep them for at least five years after the 31 January deadline for that tax year.

Using a cloud accounting system makes this a lot easier. All Go Cloud Accounting clients get help setting up digital record-keeping so they’re ready at year-end with no stress. 

Understand capital allowances vs day-to-day expenses

Smaller purchases (like stationery or fuel) are claimed as day-to-day running costs. Larger items like computers, machinery, or office furniture may need to be claimed as capital allowances.

This means you spread the cost over several years rather than deducting the full amount at once. The rules can be fiddly, but in many cases the Annual Investment Allowance (AIA) lets you deduct the full cost of equipment in the year you bought it.

If you're unsure, it's worth checking with us so you don’t miss out or overclaim and end up getting caught out by HMRC.

File your return and claim correctly

When you complete your Self Assessment tax return, you’ll declare:

• Your total income from self-employment

• Your total allowable expenses

HMRC lets you claim either:

• Actual costs, where you list everything you spent (the method most sole traders use), or

• Simplified expenses, where you use HMRC’s flat rates for things like working from home, vehicle use, or living at your business premises. If you choose simplified expenses, you must use the flat rate method consistently year-on-year.

If you’re unsure which approach makes sense for your business, Go Cloud Accounting can walk you through the options and prepare your return for you. 

Avoid common mistakes

Some common pitfalls to avoid:

• Claiming for things that are partly or mostly personal

• Forgetting to include small but regular costs (subscriptions, software, postage)

• Not keeping clear evidence of purchases

• Trying to claim expenses that HMRC doesn’t allow (e.g. clothing unless it’s protective or branded)

• Not claiming capital allowances where they apply

Even small errors can delay your return or trigger a HMRC query. At Go Cloud Accounting, we check every claim before it goes in so there are no surprises later. 

Claiming business expenses properly is one of the easiest ways to reduce your tax bill and stay compliant. But to do it right, you need good records, an understanding of the rules, and ideally some help from a professional.

If you’re just starting out or want a second opinion on what you can claim, we’ll make sure you get it right - without the technical jargon.

This guide was written by Go Cloud Accounting - helping sole traders and small business owners across the UK keep more of what they earn, without the hassle. Ready to simplify your expenses? Get in touch.