HMRC Expense Categories for Sole Traders

The complete list of self-employment expense categories from the SA103 form.

These categories are used on the SA103 (Self Employment supplementary page) and are the categories QuarterlyUK uses for expense tracking. When you log an expense in QuarterlyUK, you select one of these categories so your records are always aligned with what HMRC expects.

For official guidance, see the GOV.UK guide to keeping self-employment records and the SA103 detailed notes.

Cost of goods bought for resale or goods used

This covers the direct costs of any goods you buy to sell on, or raw materials and supplies used to produce your goods or deliver your services. It includes stock purchases, raw materials, and any items consumed directly in producing what you sell.

Examples

Stock or inventory purchased for resale
Raw materials (e.g. fabric for a tailor, ingredients for a baker)
Packaging materials and shipping supplies
Direct costs of producing goods (e.g. printing costs for a publisher)

Note: Only include goods directly related to your business output. Personal purchases must never be included, even if bought from the same supplier.

Car, van and travel expenses

Business travel costs, including vehicle running costs for the business portion of your vehicle use. You can either claim actual costs (fuel, insurance, repairs) proportioned for business use, or use HMRC simplified mileage rates.

Examples

Fuel for business journeys
Parking fees and tolls on business trips
Train, bus, or taxi fares for business travel
Vehicle insurance, servicing, and MOT (business portion only)

Note: If you use your personal vehicle for business, you must only claim the business portion. Many sole traders find it simpler to use HMRC's mileage allowance (45p per mile for the first 10,000 miles, then 25p).

Wages, salaries and other staff costs

Payments to employees and subcontractors working in your business. This includes gross wages, employer National Insurance contributions, pension contributions, and payments to freelancers or subcontractors under CIS.

Examples

Employee gross wages and salaries
Employer National Insurance contributions
Employer pension contributions
Subcontractor or freelancer payments

Note: You cannot claim your own wages or drawings as a sole trader. This category is only for payments to other people who work for your business.

Rent, rates, power and insurance costs

Costs of your business premises, including rent, business rates, utility bills, and business insurance. If you work from home, you can claim a proportion of your household costs or use HMRC's simplified expenses flat rate.

Examples

Office or workshop rent
Business rates
Electricity and gas for business premises
Business insurance (public liability, professional indemnity, contents)

Note: If you work from home, HMRC's simplified expenses allow you to claim a flat rate based on hours worked: 25+ hours/month = £10/month, 51+ hours = £18/month, 101+ hours = £26/month. Alternatively, you can calculate the actual proportion of household costs used for business.

Repairs and maintenance of property and equipment

Costs of repairing and maintaining business property and equipment. This covers like-for-like repairs that restore something to its previous condition, not improvements or upgrades (which may be capital expenditure).

Examples

Repairing a broken laptop or printer
Replacing a worn-out tool with a like-for-like equivalent
Fixing a leak in your business premises
Servicing business machinery

Note: There is an important distinction between repairs (allowable) and improvements (capital expenditure). Replacing a broken window is a repair. Upgrading to double glazing is an improvement and would be claimed through capital allowances instead.

Accountancy, legal and other professional fees

Fees paid to professionals for services relating to your business. This includes your accountant, solicitor, and professional body membership fees, as well as other specialist advisors.

Examples

Accountant or bookkeeper fees
Solicitor fees for business contracts
Professional body subscriptions (e.g. RICS, CIMA, ACT)
Consultancy or specialist advisory fees

Note: Legal fees relating to the purchase of property or equipment are capital costs, not revenue expenses. Only day-to-day professional fees go in this category.

Interest on bank and other loans

Interest payments on borrowing used for business purposes. This includes bank loan interest, overdraft interest, and credit card interest on business purchases. Only the interest portion is claimable, not the capital repayment.

Examples

Interest on a business bank loan
Business overdraft interest charges
Interest on a business credit card balance
Hire purchase interest (business assets)

Note: You can only claim the business portion of interest payments. If you use a personal credit card for some business purchases, only the interest attributable to those business transactions can be claimed.

Phone, fax, stationery and other office costs

Day-to-day costs of running your office or workspace. This covers communication costs, office consumables, and general administrative supplies needed to keep your business operating.

Examples

Mobile phone bill (business portion)
Broadband and internet costs (business portion)
Postage and courier costs
Printer ink, paper, pens, and stationery

Note: If you use your personal phone or broadband for business, you can only claim the business-use proportion. Keep a record of how you calculate the split.

Advertising and business entertainment costs

Costs of promoting your business, including all forms of advertising and marketing. Business entertainment (e.g. taking a client to lunch) is recorded here but is not tax-deductible — you still need to track it for your records.

Examples

Google Ads, Facebook Ads, or other online advertising
Business cards, flyers, and printed marketing materials
Website hosting and domain name costs
Client entertainment (meals, events — recorded but not deductible)

Note: Important: business entertainment costs (e.g. client meals, event tickets for clients) must be recorded in this category but are NOT tax-deductible. They are disallowed when calculating your taxable profit. Advertising costs are fully deductible.

Other allowable business expenses

A catch-all category for legitimate business expenses that do not fit neatly into the other categories. This includes software subscriptions, training, trade publications, and miscellaneous business costs.

Examples

Software subscriptions (e.g. accounting software, design tools)
Training courses and CPD related to your business
Trade journals and professional publications
Bank charges and payment processing fees

Note: If you are unsure where an expense belongs, it likely goes here. However, make sure the expense is wholly and exclusively for business purposes. HMRC may query unusual or large amounts in this category.

Capital allowances

Capital allowances are claimed separately from the expense categories above. They cover the cost of business assets such as equipment, vehicles, and machinery. Rather than deducting the full cost in the year of purchase, capital allowances spread the tax relief over time (or allow the full amount through the Annual Investment Allowance).

Common examples

Computers, laptops, and tablets purchased for business use
Vehicles used for business
Machinery and large equipment
Office furniture (desks, chairs, shelving)

Note: Capital allowances are reported in a separate section of the SA103, not as part of the 10 expense categories above. The Annual Investment Allowance (AIA) currently allows you to deduct the full cost of qualifying assets up to £1,000,000 in the year of purchase. For more details, see GOV.UK capital allowances guidance.

Using QuarterlyUK? When you add an expense in the app, these are the exact categories available in the dropdown. Your quarterly summaries automatically group expenses by these categories, matching the format HMRC expects for MTD submissions. Try QuarterlyUK free.