Navigating self-employment in the UK comes with a learning curve, especially when it comes to managing your taxes. One of the easiest ways to reduce your tax bill is by making sure you’re claiming all the allowable business expenses you’re entitled to. But lots of sole traders miss out on some. That’s where these tax-saving tips for sole traders come in.
This guide walks through key categories of expenses you can (and should!) claim — along with a few updates and tips around digital record keeping, Making Tax Digital (MTD), and VAT.
Understanding allowable expenses
Allowable expenses are costs that are “wholly and exclusively” for your business. You deduct them from your income before working out your taxable profit, so the more you claim, the less tax you’ll pay.
Some expenses are more obvious than others (think: tools, stationery, software). But plenty fly under the radar.
Commonly missed business expenses
Home office costs
If you work from home, even just part-time, you can claim a share of your household bills, including:
- Heating and electricity
- Council tax
- Rent or mortgage interest
- Internet and phone
HMRC offers a flat-rate home working allowance if you work from home for at least 25 hours/month. It’s currently:
- £10/month for 25–50 hours
- £18/month for 51–100 hours
- £26/month for 101+ hours
Note: this flat rate doesn’t include phone or internet — if you use these for business, you can claim the business proportion separately.
➡️ HMRC simplified expenses – working from home
Vehicle and travel expenses
You can claim for business-related travel (not commuting to and from a fixed place of work), but things like client visits, site trips, or business travel.
Claimable costs include:
- Fuel
- Parking fees
- Public transport fares
- Hotel stays and meals for overnight business travel
For your vehicle, you can choose:
- Flat-rate mileage method (45p/mile for the first 10,000 miles, then 25p/mile), or
- Actual cost method (a percentage of fuel, insurance, servicing etc.)
DNA Tip: Track your business miles with ease
Keeping a paper logbook is so last decade 😅. Instead, we recommend using a mileage tracking app like MileIQ — it runs in the background and automatically logs every drive. You can then categorise trips as business or personal with one quick swipe.
This means:
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- No more guesswork or missed journeys
- Accurate records in case HMRC ever asks
- Easy end-of-year mileage totals for your tax return
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A little tech makes a big difference — and it saves you time and tax!
Training and development
If a course helps you improve your existing skills or knowledge for your current trade, it’s deductible.
You can claim:
- Online CPD courses
- Health and safety refreshers
- Tech or tools training relevant to your business
Note: you can’t claim for training that helps you branch into a new business area.
Professional fees and subscriptions
Expenses you can claim include:
- Accountancy or bookkeeping fees
- Legal advice on business matters
- Memberships to professional bodies or trade associations (if they’re on HMRC’s approved list)
➡️ HMRC: legal and financial costs
Marketing and advertising
Business promotion expenses are deductible. That includes:
- Google Ads or social media ads
- Your website costs
- Business cards and branded materials
- Flyers, events, and networking groups
- Free samples or giveaways
- Branded clothing
Just remember: client entertaining isn’t deductible (even if it’s good for business).
➡️HMRC: marketing, entertainment and subscriptions
Office supplies and equipment
Claim for things you use in your business, such as:
- Stationery and printer ink
- Postage
- Software subscriptions
- Laptops, phones, or other kit (if bought for business use)
➡️ If you use cash basis accounting, you can usually claim all of these as expenses.
➡️ If you use traditional accounting, large items are usually claimed as capital allowances instead.
Bank charges and interest
You can claim:
- Business account fees
- Overdraft interest
- Credit card charges (for business use only)
- Interest on business loans
Loan repayments of capital aren’t deductible — just the interest portion.
Simplified expenses scheme
HMRC lets sole traders use simplified flat rates for some costs (like vehicles and home working) rather than calculating exact proportions.
It applies to:
- Business mileage
- Working from home
- Living on your business premises
➡️ Simplified expenses explained
Using Xero to track your expenses
If you’re not already using cloud accounting software like Xero, now’s a great time to start. It’s one of the best tax-saving tips for sole traders too — helping you log expenses, track income, and stay organised year-round.
You can:
- Snap and store receipts on your phone
- Reconcile bank transactions in real-time
- Categorise expenses automatically
- Track VAT and monitor thresholds
It also makes your year-end tax return much easier (or even automated), especially with MTD ITSA on the horizon.
DNA Tip: Explore our Tech Toolbox for time-saving apps
Not sure where to start with digital tools? We’ve got you covered. Our Tech Toolbox is packed with our favourite apps for streamlining your finances — from receipt scanners and mileage trackers to time-logging tools and accounting software like Xero.
It’s all about finding clever, easy-to-use tools that save you hours and help keep your records HMRC-compliant (with less faff).
Smart tech = less stress + more headspace for running your business.
How DNA Accountants can help
We’re here to take the stress out of tax for sole traders. Whether you’re just starting out or scaling up, we’ll:
- Help you set up Xero and show you how to use it
- Review your expenses to make sure you’re not missing a trick
- Keep you compliant with HMRC rules
- Warn you when you’re close to the VAT threshold
- Prepare and submit your Self Assessment (or do it all for you!)
- Get you MTD ITSA-ready
We are real humans who genuinely care. We know what it’s like to manage work, finances, and everything in between.
Keep an eye on the VAT threshold
Lots of sole traders accidentally go over the VAT threshold without realising. The current threshold is £90,000 in a 12-month rolling period (not by calendar year or tax year).
Once you go over, you must register for VAT within 30 days.
➡️ We’ve got a full blog post on VAT and MTD — check it out if you’re anywhere near the threshold.
Don’t forget MTD ITSA is coming
Making Tax Digital for Income Tax (MTD ITSA) is being rolled out for sole traders from April 2026 (for those earning over £50,000 initially).
That means:
- You’ll need to use MTD-compatible software like Xero
- You’ll submit quarterly updates to HMRC
- The traditional Self Assessment return will eventually be replaced
We’re staying on top of all the changes so you don’t have to. If you’re not sure how it affects you, give us a shout and we’ll walk you through it.
➡️ Want a friendly MTD guide in your inbox? Just ask and we’ll send you our latest one.
Wrapping up: small tweaks, big savings
Claiming the right expenses (and not missing any!) is one of the best tax-saving tips for sole traders — and it can make a big difference to your take-home income — and it doesn’t have to be stressful. With tools like Xero, support from a friendly accountant, and a good understanding of HMRC rules, you can stay compliant and save money at the same time.
And remember — you’re not on your own. We’re here to support you every step of the way, whether you’re just starting out or running a thriving solo business.
Let’s stay in touch!
We share regular tax tips, MTD updates, and small biz advice on our socials – come and say hi:
Facebook: DNA Accountants
Instagram: @DNA.Accountants
If you’ve got any questions, just drop us a message — we’re always up for a chat (and a cuppa ☕).