What expenses can a sole trader claim in 2025?

Filing Self Assessment matters if you run a business as a sole trader. Get this right and you avoid penalties, plan your cash flow, and make smarter decisions about tax and take-home pay. Here’s what you need to know.

Who must register and when

If you earned untaxed income during the tax year, you must register for Self Assessment with HMRC. New sole traders must register by 5 October following the end of the tax year to avoid penalties.

Key deadlines you cannot miss

Paper returns must be with HMRC by 31 October. Online returns must be submitted by 31 January; that is also the usual deadline for paying any tax due. If you want HMRC to collect your Self Assessment bill via your tax code, submit by 30 December. Missing the 31 January deadline triggers an automatic £100 penalty, with further penalties if the return remains outstanding.

What goes on the return

Declare all business income and allowable expenses for the tax year. You can use the cash basis to calculate income and expenses if eligible; this means you account for money when it arrives and when you pay it out, which simplifies bookkeeping for many small sole traders. You do not send receipts with the return, but you must keep them in case HMRC asks.

Allowable expenses to report

Common allowable expenses include office costs, travel and subsistence for business journeys, uniforms and protective clothing, staff and subcontractor payments, stock and materials, business insurance and bank charges, premises costs including a fair proportion of home running costs where applicable, marketing and training directly related to the trade. Only claim the business portion when costs are mixed.

Record keeping and Making Tax Digital

From 2026 Making Tax Digital for Income Tax Self Assessment will be introduced in phases; sole traders should prepare to keep digital records and to submit periodic reports through approved software when required. Even before that change becomes mandatory, using cloud accounting makes Self Assessment faster and reduces errors.

Penalties and how to avoid them

Penalties start with a fixed fine for late filing, and grow if you delay further. If you cannot pay on time, contact HMRC as soon as possible; they often agree Time to Pay arrangements. File early where you can; it gives you time to spot and fix errors and plan how to pay any tax due.

Practical tips for sole traders

• Register for Self Assessment as soon as you start trading; don’t wait.

• Use the cash basis if it suits your business; it often simplifies small business accounting.

• Keep digital records of income and expenses; store receipts and invoices for at least the minimum period HMRC requires.

 • Consider flat rate simplified expenses for home and vehicle costs if that reduces bookkeeping.

• If you expect difficulty paying your bill, contact HMRC early to discuss a payment plan.

How an accountant can help

An accountant can prepare self-assessment returns, advise on what is allowable, set up Making Tax Digital compliant records, and help with cloud accounting tools so you see income and expenses in real time. They can also coach you on financial planning to spot savings and tax efficiencies.