HMRC Expense Categories List for UK Sole Traders (2026/27)
June 15, 2026 • 6 min read
Knowing which expenses you can claim is essential for accurate Self Assessment tax returns. This guide covers all HMRC-approved expense categories for UK sole traders, with examples of what you can (and cannot) claim.
What Are HMRC Expense Categories?
HMRC requires sole traders to group business expenses into specific categories on their Self Assessment tax return. Using the correct categories helps you claim all allowable expenses and avoid HMRC inquiries.
Censitio helps you categorize bank transactions into these exact HMRC categories, saving hours of manual spreadsheet work.
Complete HMRC Expense Categories List
Here are the official HMRC expense categories for sole traders, with examples of what you can claim:
1. Entertainment and Hospitality
Costs for entertaining clients, business meals, or hospitality events. Note: HMRC restricts claims for entertainment expenses unless specific conditions apply.
2. Cost of Goods Sold
Direct costs of producing goods or services, including raw materials, stock purchases, and manufacturing costs.
3. Wages and Staff Costs
Salaries, wages, bonuses, pension contributions, and National Insurance for employees (not including your own drawings).
4. Car and Travel Expenses
Fuel, parking, public transport, train fares, and mileage. For private vehicles, use HMRC's approved mileage rates (45p per mile for first 10,000 miles).
5. Rent, Rates, Power and Insurance Costs
Business premises rent, business rates, electricity, gas, water, and business insurance premiums.
6. Repairs and Maintenance
Repairs to business equipment, property maintenance, and servicing costs (not improvements or capital expenditure).
7. Phone and Internet
Business phone bills, mobile contracts, broadband, and website hosting fees.
8. Office Costs
Stationery, printing, postage, and small office equipment (under £250).
9. Advertising and Marketing
Website costs, online ads, brochures, business cards, and promotional materials.
10. Professional Fees
Accountant fees, legal fees, surveyor costs, and professional subscriptions.
11. Interest and Bank Charges
Business bank account fees, loan interest, credit card charges, and overdraft fees.
12. Finance Costs
Hire purchase interest, lease payments, and other financing costs.
13. Bad Debts
Unpaid invoices that you cannot recover (written off as bad debt).
14. Other Business Expenses
Any other allowable expenses not covered by the categories above, such as training courses or protective clothing.
What Expenses Cannot Be Claimed?
- Personal expenses: Anything for personal use, even if paid from business account
- Drawings: Money you take from the business for personal use
- Capital expenditure: Large equipment purchases (claim capital allowances instead)
- Fines and penalties: Parking fines, late filing penalties, etc.
- Business entertainment: Most client entertainment costs (there are exceptions)
- Political donations: Not allowable as business expenses
How to Track and Categorize Expenses
Manually assigning expense categories to hundreds of transactions is time-consuming and error-prone. Censitio helps you:
- Import CSV bank statements in seconds
- Assign HMRC categories using an intuitive dropdown menu
- Review and adjust categories before exporting
- Export HMRC-ready Excel summaries for Self Assessment
Desktop app users: Automatic categorization with HMRC rules – no manual selection needed.
Record Keeping Requirements
HMRC requires you to keep records for at least 5 years after the 31 January submission deadline. This includes:
- Bank statements and receipts
- Categorized transaction records
- Excel exports from Censitio
- Proof of expenses (receipts, invoices)
Frequently Asked Questions
Can I claim home office expenses?
Yes. Use HMRC's simplified expenses flat rate (up to £26 per month) or claim a proportion of actual costs like rent, utilities, and insurance.
What about clothing and uniforms?
Protective clothing or uniforms with a logo are allowable. Everyday clothing is not, even if worn for work.
Do I need receipts for all expenses?
Yes. Keep receipts, invoices, and bank statements to prove your expenses if HMRC asks. Censitio exports help you maintain digital records.
What's the difference between expenses and capital allowances?
Expenses are day-to-day running costs. Capital allowances are for purchasing business assets like equipment, vehicles, or machinery that last longer than a year.
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