Freelancer Finances · February 2026

Freelancer Tax Deductions UK 2025/26: Every Expense You Can Claim

If you're a freelancer or sole trader in the UK, every legitimate expense you don't claim is money you're giving away to HMRC. This guide covers every allowable deduction for the 2025/26 tax year — in plain English, with practical examples, and without the jargon that makes most tax advice unreadable.

How Freelancer Tax Deductions Work

As a self-employed person in the UK, you pay income tax on your taxable profits — not your total income. Taxable profits = total income minus allowable expenses. The more legitimate expenses you claim, the less tax you pay.

HMRC's rule is simple: an expense is allowable if it's incurred "wholly and exclusively" for business purposes. That's the test for everything. If you bought it to do your work, you can almost certainly claim it. If it's a personal purchase that happens to be useful for work, you probably can't — unless you can split the cost proportionally.

Quick example: Your turnover is £45,000. You claim £8,000 in legitimate expenses. Your taxable profit is £37,000. After the £12,570 personal allowance, you pay income tax on £24,430 instead of £32,430. At the 20% basic rate, that's £1,600 less tax. Real money.

Key Numbers for 2025/26

Before diving into specific deductions, here are the numbers that matter for the 2025/26 tax year (6 April 2025 – 5 April 2026):

Now let's go through every category of expense you can claim.

Home Office Costs

If you work from home — and most UK freelancers do — you can claim a proportion of your household running costs. There are two methods:

Option 1: Simplified expenses (flat rate)

HMRC offers fixed monthly rates based on how many hours you work from home:

This is easy — no receipts for household bills needed. But the amounts are modest. If you work from home full-time, that's only £312/year.

Option 2: Actual costs (proportional)

Calculate the business proportion of your household costs based on rooms used and time spent. Costs you can include:

For example: if you have a 4-room home and use 1 room exclusively as an office, you could claim 25% of your eligible household costs. If your annual costs total £12,000, that's £3,000 in deductions — nearly ten times what the flat rate gives you.

💡 Capital Gains Tax warning: If you use a room exclusively for business, it could affect your Capital Gains Tax exemption when you sell your home. To avoid this, make sure the room has some personal use too — even if it's just occasionally using it as a guest room or for personal browsing. The "mixed use" defence keeps your CGT exemption intact.

Technology & Software

This is where modern freelancers rack up significant deductions. You can claim:

If you use a device for both personal and business purposes (like most people do with their laptop), you should claim only the business proportion. A common split is 70/30 or 80/20 business-to-personal — just be prepared to justify your ratio if HMRC asks.

Phone & Internet

Your phone bill and broadband are claimable — but only the business proportion. If you use your mobile 60% for work and 40% for personal use, you can claim 60% of the cost.

💡 Pro tip: If you get a separate SIM or phone number for business calls, that's 100% deductible — no need to calculate proportions. Even a cheap £8/month SIM qualifies.

Travel & Transport

You can claim travel expenses for business journeys — but not your regular commute (even as a freelancer, travel from home to your regular place of work is considered commuting). Claimable travel includes:

Using your own car?

You can use HMRC's simplified mileage rates instead of tracking actual fuel and running costs:

Keep a mileage log — date, destination, purpose, and miles. HMRC won't accept a round number guess at the end of the year.

Professional Services

Any professional service you pay for to run your business is deductible:

If you pay a subcontractor, make sure you keep their invoices. And remember — if you're paying for help with your contracts or invoicing, those costs are deductible too.

Training & Development

Training is deductible if it updates or maintains existing skills that you already use in your business. This includes:

The catch: training to acquire new skills or enter a new field is generally not deductible. A web developer taking an advanced JavaScript course? Deductible. A web developer taking a plumbing qualification? Not deductible. The training must be relevant to your existing trade.

Marketing & Advertising

Everything you spend to promote your freelance business:

Insurance

Business-related insurance premiums are fully deductible:

Personal insurance (health, life, income protection) is generally not deductible as a sole trader — it's considered a personal expense, not a business one.

Office Supplies & Stationery

The small stuff adds up:

Clothing (The Tricky One)

The general rule: you can't claim everyday clothing, even if you only wear it for client meetings. HMRC considers it a personal expense because you could wear it outside of work.

What you can claim:

That nice blazer you bought for a pitch meeting? Not deductible. Sorry.

What You Can't Claim

Just as important as knowing what you can claim is knowing what you can't. These are the most common traps:

💡 The "wholly and exclusively" test: If you're ever unsure whether something qualifies, ask yourself: "Did I buy this purely for business, and would I not have bought it otherwise?" If yes, it's likely claimable. If it's a grey area, claim the business proportion and keep records of how you calculated it.

Simplified Expenses: The Easy Option

If tracking actual costs feels overwhelming, HMRC offers simplified expenses (also called flat rate expenses) for three categories:

Simplified expenses are easier to calculate and require less record-keeping, but they often give you smaller deductions than claiming actual costs. For most full-time freelancers, actual costs are worth the extra effort — especially for home office expenses.

Record-Keeping and Making Tax Digital

Whatever you claim, keep the evidence. HMRC can ask for proof of any expense, and you need to keep records for at least 5 years after the 31 January submission deadline for that tax year.

What counts as a record:

From April 2026, Making Tax Digital for Income Tax means sole traders earning above £50,000 will need to keep digital records using MTD-compatible software and submit quarterly updates to HMRC. If that's you, now is the time to move your expense tracking into proper accounting software.

Those earning £30,000–£50,000 will need to comply from April 2027. Below £30,000, there's no confirmed date yet — but going digital now saves you scrambling later.

How Expenses Connect to Getting Paid

Here's a point most tax guides miss: your expenses are only useful if you're actually getting paid. If clients owe you money that isn't coming in, your tax bill is the least of your problems.

That's why good invoicing, clear payment terms, and a proper follow-up system matter. Make sure you're invoicing correctly, sending payment reminders on time, and tracking your cash flow so you always know where you stand.

And when you do get paid — on time, every time — you'll have the income to offset those deductions against. That's the real win: getting paid properly and keeping more of what you earn.

📦 The Freelancer Getting-Paid Toolkit — £19

Getting your expenses right only works if your income is flowing. The Getting-Paid Toolkit gives you 37 email templates, 10 contract clauses, and a complete payment chasing system — so the money comes in on time and you have something to offset those deductions against.

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Written by the team at Landolio — tools and templates for freelancers who'd rather do great work than chase payments.