bLOG

Allowable Expenses for Tradespeople, Sole Trader vs Limited Company: What You Can Claim

“Can I claim this?” is the question we hear more than any other from plumbers, electricians, builders and other tradespeople.

The honest answer is: it depends, partly on what the expense is, and partly on whether you are a sole trader or run a limited company. The same van, the same laptop, the same pair of work boots can be treated differently depending on how your business is structured.

This guide covers the expenses tradespeople claim most often, the grey areas that catch people out, and exactly how the rules differ between Self Assessment (sole traders) and limited company accounts. We have also built two free interactive tools: one to check specific trade expenses, and one to compare how sole trader and limited company treatment differs for any cost.

- Tools, PPE, van costs, mileage and home office costs are claimable for most tradespeople, whether sole trader or limited company.

- The golden rule: if it is for the business, it is claimable. If it is personal, it is not. If it is both, only the business portion counts.

- Sole traders claim through Self Assessment, which reduces Income Tax and National Insurance. Limited companies claim through company accounts, which reduces Corporation Tax.

- Ordinary clothing is not claimable even if you only wear it for work. PPE and branded workwear are.

- Do not claim both the £1,000 trading allowance AND actual expenses against the same income. Pick one.

- Limited company directors need to watch for benefit-in-kind issues when the company pays for something with personal use.

The Golden Rule: Is It For the Business?

Whether you are a sole trader or run a limited company as a plumber, electrician or builder, the starting point is always the same: the expense must be for the business.

For sole traders, costs generally need to be incurred wholly and exclusively for the trade. For limited companies, the company must be able to show the cost was for business purposes. If there is personal use, it may need adjusting, treating as a benefit, or disallowing entirely.

If the cost helps you earn business income, it may be claimable.
If it is personal or private, it usually is not.
If it is a mix of both, only the business portion may be allowable.

Tools, Equipment and PPE

This is the bread-and-butter expense category for any tradesperson, and the rules are broadly similar whether you are self-employed or trading through a limited company.

Commonly Claimable

Hand tools, power tools, and replacements when they wear out
Personal protective equipment (PPE): safety boots, hi-vis, hard hats, gloves, goggles
Small equipment: ladders, toolboxes, testing equipment
Branded workwear and uniforms

Not Claimable

Ordinary clothing: a normal pair of jeans or trainers is not claimable just because you wear it on site, even if you would never wear it elsewhere.

Larger items such as a new van or major machinery are usually claimed through capital allowances rather than as a one-off expense. How this works in practice can differ between sole traders and limited companies, so it is worth checking before a big purchase.

Vehicle and Travel Costs

If you use a van or car for work, you can claim the costs of running it. There are two main approaches for sole traders:

Actual costs: fuel, insurance, servicing, repairs, based on the proportion of business use.
HMRC mileage rates: a flat rate per business mile instead of tracking individual costs.

You cannot switch methods partway through owning the vehicle, so it is worth deciding early. If you use your van heavily for work, actual costs may produce a better result, but mileage is often simpler to track.

For limited companies, the company often reimburses directors and employees using mileage rates for business journeys in personal vehicles, or the company may own the vehicle directly. Each route has different tax implications.

Ordinary commuting (home to your regular base of work) generally is not claimable either way. Travel to a temporary client site usually is.

Home Office and Admin Costs

If you handle quotes, invoicing or admin from home, even if most of your work is on-site, you can usually claim a proportion of your household costs:

Heating and electricity
Phone and broadband
Office supplies

Sole traders can use HMRC’s simplified flat-rate amounts based on hours worked from home, or calculate the actual business proportion. For limited company directors, the treatment can work differently and needs more care. It is worth getting this set up correctly rather than guessing.

Clothing: One of the Most Misunderstood Areas

Claimable: branded workwear with a logo or company name, protective clothing and safety gear such as hi-vis, boots, helmets and gloves.

Not claimable: ordinary clothing. Even if you only wear it for work, HMRC’s view is that it could be worn anywhere. A hi-vis jacket and steel-toe boots: yes. A plain pair of work jeans: no. This applies whether you are a sole trader or limited company.

Food, Training, Phone and Subscriptions

Food and Meals

Everyday lunches are not claimable just because you are working. Meals may be allowable where linked to qualifying business travel, such as an overnight trip.

Training

A course that updates your existing trade skills may be allowable. A course that gives you a completely new trade or profession may be treated differently.

Phone and Software

A proportion of your mobile bill (or the full cost if it is a dedicated work phone), plus accounting and invoicing software, trade body memberships, and relevant insurance such as public liability, tools cover, and professional indemnity are commonly claimable.

Sole Trader (Self Assessment): How It Works

If you are self-employed, your taxable profit is calculated like this:

Business income − allowable business expenses = taxable profit

So if you earn £50,000 and have £12,000 of allowable expenses, your taxable profit is £38,000. Income Tax and National Insurance are calculated on that profit, not your turnover.

Commonly claimable expenses for sole trader tradespeople include: tools and equipment, work materials, van and vehicle costs, business mileage, insurance, accountancy fees, phone and internet, software subscriptions, advertising, training related to your existing trade, use of home as office, bank charges, subcontractor costs, and PPE.

The £1,000 Trading Allowance Trap

A common mistake is trying to claim both the £1,000 trading allowance AND actual business expenses against the same income. You choose one:

- Claim the £1,000 trading allowance, or

- Claim your actual allowable expenses

You do not normally claim both. If your actual costs are higher than £1,000, which they are for most working tradespeople, claiming actual expenses usually reduces your tax bill more.

Limited Company: How It Works

A limited company is legally separate from you as director or shareholder. The company claims its expenses through the company accounts, reducing the company’s taxable profit for Corporation Tax:

Company income − allowable company expenses = taxable company profit

If your company makes £80,000 in sales with £30,000 of allowable expenses, the company’s profit before tax is £50,000, and Corporation Tax is calculated on that figure.

Common limited company expenses include: accountancy fees, business insurance, software subscriptions, website costs, marketing, business phone costs, computer equipment, office costs, staff wages, employer pension contributions, employer National Insurance, subcontractor costs, business travel and mileage, training, professional memberships, bank charges and business loan interest.

The Extra Layer for Directors: Company Expense or Personal Benefit?

If you are a director, who paid for something and who benefits from it matters. There are usually three outcomes:

1. The company pays, and it is fully business-related. Cleanest position. Example: the company pays for accounting software used only for company bookkeeping.

2. You personally pay for a company cost, and the company reimburses you. Fine, provided it was genuinely for business. Keep the receipt and record the reimbursement properly. Example: you buy printer ink on your personal card and the company pays you back.

3. The company pays for something with personal benefit. Needs more care. Example: the company pays for a mobile contract used partly for business, partly personally. Depending on the facts, this can create a benefit-in-kind issue or reporting requirement.

Directors should not put every cost through the company without checking how it should be treated.

Sole Trader vs Limited Company: The Key Differences at a Glance

Area	Sole Trader / Self Assessment	Limited Company
Who claims the expense?	You personally, through your tax return	The company, through company accounts
What tax does it reduce?	Income Tax and National Insurance	Corporation Tax
Is the business separate from you?	No	Yes
Can personal use cause issues?	Yes: private use must be adjusted	Yes: may also create benefit-in-kind issues
Where is it reported?	Self Assessment	Company accounts and Corporation Tax return

Why Record-Keeping Matters

Even when an expense is allowable, you need evidence: receipts, invoices, bank statements, mileage logs, and a note of the business purpose, dates and amounts. A bank transaction alone may not be enough if HMRC asks questions later.

A good habit is recording the reason for an expense at the time you pay it, for example “Train to London for client meeting with ABC Ltd,” rather than trying to remember it 14 months later.

Not Sure About a Specific Expense? Use Our Free Tools

We have built two interactive checkers to help you get this right:

Allowable Expense Calculator: check how a specific trade expense is treated.
Limited Company vs Self Assessment Checker: see how the same expense is treated differently depending on your business structure.

Answer a couple of quick questions and get an instant, practical answer, including when it is worth speaking to an accountant before you claim.

Common Mistakes to Avoid

Claiming personal costs as business expenses. If it is private, it should not be claimed just because it came out of a business account.
Forgetting to adjust for personal use. Mobile phones, internet, vehicles, home office and laptops often have mixed use, and only the business portion is claimable.
Using the wrong method for vehicle costs. Sole traders choosing between mileage and actual costs, or limited companies reimbursing at the wrong rate.
Claiming the trading allowance and expenses together. Pick one, not both.
Not keeping receipts. If you cannot prove it, HMRC may challenge it.

Frequently Asked Questions

Can I claim for work boots and hi-vis clothing?

Yes. Protective clothing, PPE and branded workwear are allowable — whether you’re a sole trader or limited company. Ordinary clothing worn for work, like jeans or trainers, generally isn’t, as HMRC views it as suitable for everyday use.

Does it matter if I'm a sole trader or limited company when claiming expenses?

Yes. Sole traders claim through Self Assessment, which reduces Income Tax and National Insurance on their profit. Limited companies claim through company accounts, which reduces Corporation Tax. and directors need to watch for benefit-in-kind issues when the company pays for something with personal use. Our Limited Company vs Self Assessment checker compares treatment for specific expenses

Can I claim mileage if I'm self-employed?

Yes. You can use HMRC’s flat-rate mileage allowance for business travel in your own vehicle, or claim actual running costs based on business-use proportion. You can’t switch methods partway through owning the vehicle.

I work from home doing quotes and admin — can I claim anything?

Yes. You can claim a proportion of household costs like heating, electricity, phone and broadband. Sole traders can use HMRC’s simplified flat-rate amounts; limited company directors should get this set up correctly as the treatment can differ.

Can I claim both the £1,000 trading allowance and my expenses?

Not usually against the same income, you choose one. If your actual costs are higher than £1,000, claiming actual expenses generally reduces your tax bill more.

What happens if my limited company pays for something I also use personally?

It may need to be adjusted, reported as a benefit-in-kind, or partly disallowed, depending on the facts. This is one of the most common areas where directors get caught out — it’s worth checking before claiming rather than after.

What records do I need to keep?

Receipts, invoices, bank statements, mileage logs, and a note of what the expense was for and why it related to the business. A bank transaction alone often isn’t enough if HMRC asks questions later.

Not Sure What You Can Claim?

Send us your receipts and we’ll tell you exactly what’s claimable — or use one of our free checkers for an instant answer on a specific expense or business structure question.