5 Allowable Expenses Side Hustlers Forget to Claim (UK 2026/27)
Most UK side hustlers overpay tax simply because they do not know what they can claim. HMRC's rules on allowable expenses are surprisingly generous — but the onus is on you to identify, record, and declare them. Missing just one or two of these deductions can cost hundreds of pounds in unnecessary tax each year.
This guide covers the five most commonly forgotten allowable expenses for UK self-employed workers and side hustlers. Every item is backed by HMRC guidance and includes practical examples you can apply immediately to your 2026/27 Self Assessment.
Contents
Home Office Use Save £100–£600/year
If you work from home — even a few hours a week — you can claim a proportion of household running costs. HMRC accepts two methods: the simplified flat rate and the actual cost method.
Simplified Flat Rate (Easy but Often Underclaims)
| Hours Worked at Home / Month | Flat Rate / Month |
|---|---|
| 25–50 hours | £10 |
| 51–100 hours | £18 |
| 101+ hours | £26 |
At 101+ hours, that's £312/year. But if you heat a room 8 hours a day, use broadband exclusively for client calls, and occupy 15% of your home's floor space, the actual cost is usually significantly higher.
Actual Cost Method (More Work, More Tax Relief)
Calculate the percentage of your home used for business, and the percentage of time it is used. For example:
- Home has 4 rooms, 1 used as office = 25% floor space
- Used 8 hours/day, 5 days/week = ~24% of the week
- Annual household costs: £3,600 (council tax, heat, light, broadband, insurance)
- Claimable: £3,600 × 25% × 24% = £216/year
If you also pay rent or mortgage interest, the numbers grow fast. A freelancer in London paying £1,200/month rent with a 10% office claim could deduct £1,440/year in rent apportionment alone.
⚠️ The Trap
Many side hustlers default to the £6/week simplified rate because it is easy. If your actual costs are higher, you are leaving money on the table. You can switch methods year-to-year — pick whichever gives the bigger deduction.
Mileage and Travel Save £200–£1,500/year
HMRC's Approved Mileage Allowance Payments (AMAP) rates for self-employed people are generous — and most side hustlers under-record their miles.
| Vehicle | First 10,000 Miles | Above 10,000 Miles |
|---|---|---|
| Car / Van | 45p/mile | 25p/mile |
| Motorcycle | 24p/mile | 24p/mile |
| Bicycle | 20p/mile | 20p/mile |
The 45p rate covers fuel, maintenance, insurance, depreciation, and road tax. You do not claim these separately if you use the mileage rate. But you can claim parking, tolls, and congestion charges on top.
What Counts as Business Mileage?
- ✅ Travel from home to a temporary workplace or client site
- ✅ Travel between two different client sites in the same day
- ✅ Travel to buy business supplies or equipment
- ❌ Commuting from home to a permanent workplace (including your own home office if you also work elsewhere)
- ❌ Personal detours or non-business travel
A freelance consultant driving 80 miles round-trip to a client twice a month claims 1,920 miles/year = £864 in deductions. A delivery driver doing 120 miles/day, 3 days/week claims 18,720 miles/year = £6,680 in deductions (£4,500 at 45p + £2,180 at 25p).
💡 Pro Tip
Use a mileage tracking app (e.g., Driversnote, MileIQ) or simply photograph your odometer at the start and end of each business trip. HMRC requires records. A spreadsheet with date, purpose, start postcode, end postcode, and miles is sufficient.
Phone and Internet Apportionment Save £150–£400/year
If you use your personal mobile or home broadband for business, you can claim the business percentage of the bill. This is one of the most underclaimed expenses because people assume "it's already paid for."
How to Apportion Fairly
- Time-based: If you work 30 hours/week and use your phone 50% for business during that time, claim 50% of the bill.
- Usage-based: Review 3 months of bills. Count business calls, data used for client work, and business apps. If 40% of usage is business, claim 40%.
- Dedicated line: If you buy a second phone or broadband line purely for business, claim 100% including installation and handset cost.
A £60/month phone-and-broadband package with 50% business use = £360/year in deductions. At 20% tax, that saves £72/year. At 40% tax, £144/year. Small, but it adds up across multiple expenses.
⚠️ The 100% Trap
Do not claim 100% of a personal phone "because I need it for work." HMRC will challenge this unless you can prove zero personal use. If you use Instagram or WhatsApp personally on the same device, your claim must be apportioned.
Professional Subscriptions and Training Save £100–£800/year
HMRC allows you to deduct costs that maintain or update your existing skills. This is a surprisingly broad category that many side hustlers ignore.
Claimable Subscriptions
- Professional body memberships (e.g., AAT, CIPD, CIMA, RIBA) — if relevant to your trade
- Software subscriptions (Adobe Creative Cloud, Canva Pro, QuickBooks, Xero, Slack, Notion)
- Trade publications and industry research subscriptions
- Professional indemnity insurance premiums
Claimable Training
- ✅ Courses that update or maintain your current skills (e.g., advanced Excel for a bookkeeper, SEO course for a marketer)
- ✅ CPD (Continuing Professional Development) required by your professional body
- ❌ Courses that qualify you for a new trade (e.g., a plumber doing a law degree — this is capital expenditure, not revenue)
A freelance graphic designer paying £55/month for Adobe Creative Cloud and £200/year for a design association membership claims £860/year. A virtual assistant with £30/month software stack claims £360/year. These are pure overhead — every pound claimed reduces your tax bill at your marginal rate.
Bank Charges and Bad Debts Save £50–£300/year
The costs of simply being paid are allowable. So are losses when clients do not pay.
Bank and Payment Fees
- Business bank account monthly fees (e.g., £7/month Mettle, £0 Starling but paid-for features)
- PayPal, Stripe, or Square transaction fees (typically 1.5% + 20p per transaction)
- Foreign exchange fees on international client payments
- Invoice factoring or late payment chasing fees
If you invoice £15,000/year through PayPal at 2.9% + 30p, you pay roughly £480 in fees. That is fully deductible. Many side hustlers absorb these as "cost of doing business" without recording them — a £96–£192 tax saving lost, depending on your bracket.
Bad Debts
If a client genuinely cannot pay and you have written off the debt, you can claim the inclusive VAT amount as an expense. You must have:
- Issued the invoice and included it in a previous tax return as turnover
- Made reasonable efforts to recover the debt (emails, letters, debt collection)
- Written it off in your accounts
A £2,000 unpaid client invoice written off reduces your taxable profit by £2,000. At 20% tax, that's £400 back. At 40%, £800 back.
Trading Allowance vs. Actual Expenses
HMRC offers a £1,000 Trading Allowance for casual self-employment income. If your turnover is under £1,000, you do not need to register for Self Assessment. If it is over £1,000, you can choose to deduct the £1,000 allowance instead of your actual expenses.
| Scenario | Actual Expenses | £1,000 Allowance | Best Choice |
|---|---|---|---|
| Consultant, £12k turnover, £400 costs | £400 | £1,000 | Allowance |
| Consultant, £12k turnover, £2,500 costs | £2,500 | £1,000 | Actual |
| Etsy seller, £8k turnover, £3k materials | £3,000 | £1,000 | Actual |
| Dog walker, £6k turnover, £200 travel | £200 | £1,000 | Allowance |
✅ The Rule
If your actual expenses exceed £1,000, claim actuals. If they are below £1,000, use the allowance. You cannot mix both. Once you choose actuals, you must record and declare every expense — but the tax saving is usually worth the admin.
Calculate Your Tax With These Expenses
Our calculators let you input expenses line-by-line and see the real-time impact on your Self Assessment bill. Try them now:
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Can I claim food and drink as a business expense?
Generally, no. HMRC classifies food and drink as "personal subsistence" unless you are travelling overnight for business. A sandwich at your desk is not deductible. A meal during a 200-mile round trip to a client may be, if it is reasonable and necessary. The "24-month rule" also applies: if you work at the same temporary site for more than 24 months, travel and subsistence claims stop.
Can I claim clothing for work?
Only if it is specialist protective clothing or a uniform with your business logo. Everyday clothing, even if you only wear it for work, is not deductible. A builder can claim steel-toe boots and hi-vis jackets. A consultant cannot claim their Marks & Spencer suit.
What records do I need to keep?
HMRC requires you to keep records for 5 years after the 31 January submission deadline of the relevant tax year. For 2026/27 (filed by 31 Jan 2028), keep records until January 2033. Acceptable formats: receipts (photos are fine), bank statements, mileage logs, invoices, and spreadsheet summaries. You do not need to submit receipts with your return, but you must produce them if HMRC opens an enquiry.
Can I claim pre-trading expenses?
Yes. Costs incurred up to 7 years before you start trading can be claimed if they would have been allowable had the business already existed. This includes market research, website development, stock purchases, and training. Claim them in your first tax return as if they were incurred on the first day of trading.
Can I claim my car purchase as an expense?
If you use the actual cost method for vehicle expenses, you can claim capital allowances on the car purchase price based on CO2 emissions. Alternatively, the mileage method (45p/25p per mile) includes depreciation implicitly — you cannot then also claim the purchase price. Most side hustlers find the mileage method simpler and more generous for lower-value vehicles.
📚 Sources & References
HMRC Guidance: Business Income Manual (BIM37600 – Expenses: general)
HMRC Guidance: Simplified Expenses (HS222)
HMRC Guidance: Work from Home Expenses (HS222)
HMRC Approved Mileage Rates (AMAP), 2026/27
HMRC Capital vs Revenue Expenditure (BIM35000 series)