Common expense questions, straight answers.
Ten of the questions we get asked most often, mirrored in the FAQ schema.
What does wholly and exclusively for business mean?+
It means the expense must be incurred entirely for the purposes of the business. If something has any personal use element (phone, vehicle, home), you can only claim the business proportion. HMRC's test is whether you would have incurred the expense if you didn't have the business. Personal living costs fail this because you'd incur them regardless. The business proportion must be calculated reasonably with supporting evidence.
What is the mileage rate for self-employed in 2025/26?+
45p per mile for the first 10,000 business miles per tax year, then 25p per mile beyond that. These rates cover all running costs (fuel, insurance, repairs, MOT, road tax, depreciation) so you cannot also claim those separately if using the mileage method. The alternative is the actual costs method where you claim the business proportion of all real vehicle expenses, which requires a detailed mileage log.
What are the simplified expenses rates for working from home?+
Self-employed sole traders can use simplified expenses flat rates: £10/month for 25 to 50 hours of business use per month, £18/month for 51 to 100 hours, £26/month for 101+ hours. These cover heat, light and other utilities but NOT phone, internet or rent/mortgage interest. The actual costs method allows claiming proportions of rent or mortgage interest, council tax, utilities, internet and insurance based on room-and-time apportionment.
Can I claim food and lunch as a self-employed business expense?+
Generally no. Subsistence during a normal working day from your normal place of business is not allowable. The exception is when you're travelling on business away from your normal base, particularly overnight stays where reasonable meal costs are allowable. Client entertainment (meals with customers) is never allowable. Staff entertainment up to £150 per head per year is allowable for any employees, but you as sole trader entertaining yourself is not.
What is the £1,000 Trading Allowance?+
A fixed allowance that lets sole traders earning up to £1,000 of gross trading income skip registering for Self Assessment entirely. Above £1,000, you can choose to deduct the £1,000 allowance instead of actual expenses (but not both). Most established sole traders have expenses well over £1,000 so claiming actual is usually better. The trading allowance is mainly useful for side-hustle and hobby income at very low levels.
Can I claim clothing as a business expense?+
Almost never for normal clothing. HMRC's view is that ordinary clothing serves a dual purpose (warmth, decency, fashion) regardless of whether you wear it for work. Allowable exceptions are limited to: specialist protective clothing (high-vis, safety boots, hard hats), uniforms with permanent business branding that you wouldn't wear elsewhere, costumes for performing artists, and certain specialist professional clothing required by law. Suits, smart shirts, regular shoes are not allowable.
How long must I keep business expense records?+
5 years from 31 January following the relevant tax year for sole traders and partnerships (effectively 5 years and 10 months after the tax year ends). HMRC can open enquiries within 12 months of filing, raise discovery assessments up to 4 years back for innocent error, 6 years for carelessness, 20 years for deliberate non-compliance. Digital records via cloud accounting are now preferred and required under MTD ITSA where applicable.
How does MTD ITSA affect record keeping?+
Phase 1 of MTD ITSA went live on 6 April 2026 for sole traders and landlords with qualifying income above £50,000. From that point you must keep digital records of all business income and expenses and submit quarterly updates plus an End of Period Statement plus a Final Declaration via MTD-compatible software. Paper records, spreadsheets without bridging software, and shoeboxes of receipts no longer comply. Phases 2 and 3 (April 2027 and April 2028) extend MTD down to £30k and £20k thresholds.
Can I claim training course costs?+
Yes if the training maintains or updates skills you already use in your current business. No if the training equips you for a new trade or profession you don't yet carry on. So a web developer learning a new framework: allowable. The same person taking a course to retrain as a solicitor: not allowable (new profession). Professional CPD requirements for your existing qualifications are allowable. University degrees are rarely allowable because they tend to be enabling rather than maintaining.
What happens if I over-claim or claim non-allowable expenses?+
HMRC disallows the expense, recalculates the tax, charges late payment interest (Bank of England base rate plus 4%) from the original due date, and applies a behaviour-based penalty: 0% to 30% of the additional tax for innocent error, 15% to 70% for careless, 30% to 100% for deliberate, up to 100% for concealment. Suspended penalties may apply for cooperative correction. We can represent clients through enquiries; reasonable cooperation usually keeps penalties at the lower end of the bands.
