An expense is not allowable simply because money left the business account. For a sole trader, the starting point is whether it was incurred wholly and exclusively for the trade, with a fair treatment where a cost has both business and personal use. Keep the record and the reason together.
Start with the business purpose
For each material cost, identify what the business bought, when, who supplied it, how it supports the trade and whether there is personal use. Typical categories can include stock or materials, premises costs, phone or software, marketing, professional fees, travel and staff costs. The category should follow the evidence; it should not be used to make a private cost look business-related.
Travel and mileage
Business travel is different from ordinary commuting. Keep the date, journey, business purpose and distance or actual-cost evidence needed for the method you use. Do not mix employee mileage treatment with sole-trader records, or assume a rate is universal.
Simplified expenses are a choice, not an automatic upgrade
GOV.UK provides simplified-expense methods for eligible sole traders and partnerships without company partners. Before using one, confirm eligibility and understand which costs the method is intended to replace. Do not claim both a flat-rate amount and the same actual cost.
Make the record reviewable
Attach or retain invoices and receipts, reconcile card and bank activity and note any split between business and personal use. A simple question list is often more useful than a category with no explanation: What was it? What was the business purpose? Is any amount personal? What document supports it?
Related FoxSums resources
- Business Mileage and Expense Claim Log
- Making Tax Digital for Income Tax: Getting Ready
- Self Assessment Preparation Checklist
Next step
Keep the purpose and evidence with the cost, then check the applicable rules before including it in a return.
Important
General information only. Check the facts and current official guidance for the business’s circumstances.
Sources and review
- Evidence check date: 3 November 2026.
- GOV.UK - Expenses if you are self-employed
- GOV.UK - Travel costs if you are self-employed
- GOV.UK - Simplified expenses