How to Track Job Expenses as a UK Sole Trader

To track job expenses properly, record every cost the moment you pay it: the amount, the date, the category and a photo of the receipt. Tie it to the job it belongs to, and keep the record for at least five years after the Self Assessment deadline. Do that on the day, from your phone, and the end-of-year scramble disappears. This guide shows what HMRC lets you claim, what it expects you to keep, and a routine you can run from the van.

TL;DR

• Claim only costs incurred wholly and exclusively for business. Personal items stay out.
• For each expense, keep the amount, the date and the category, plus the receipt. You don’t send receipts in with your return, but you must be able to produce them if HMRC asks.
• Keep records for at least five years after the 31 January submission deadline for that tax year.
• Photograph receipts on the day, tag them to a job, and log mileage as you go.
• Making Tax Digital for Income Tax is phasing in from 6 April 2026, so digital records are becoming the norm rather than the exception.

Table of Contents

• What counts as a job expense
• What HMRC expects you to record
• Cash basis or traditional accounting: why it changes your tracking
• Four ways to track job expenses, compared
• A daily routine that takes five minutes
• Keep personal and business spending apart
• The costs tradespeople most often miss
• Making Tax Digital: why your records are changing
• Our view: track the job, not just the tax
• Where TradeTally fits
• A worked example: one bathroom refit
• Common mistakes to avoid
• FAQ
• Sources

What counts as a job expense

A job expense, in the sense most tradespeople mean it, is any cost you pay to do a piece of work and that you can deduct when working out your taxable profit. HMRC calls them allowable expenses, and the test is simple: the cost must be wholly and exclusively for business purposes.

The categories HMRC lists for sole traders include:

• Office costs: stationery, phone and internet.
• Travel: fuel, parking, train and bus fares, hotel stays.
• Staff costs: wages, and CIS payments to subcontractors.
• Things you buy to sell on: stock and raw materials. For most trades, this is your materials.
• Insurance and professional fees.

What you cannot claim is just as clear: personal use items, and costs connected with settling tax disputes. If something is half work and half personal, such as a phone you use for both, you can only claim the business share. Work out that share sensibly and write down how you got to it.

A job-by-job view

The HMRC categories tell you where a cost goes on your tax return. Your own tracking should answer a different question: what did this job cost me? That means each expense carries two labels:

1. The tax category, such as materials, travel or insurance.
2. The job, such as “Mrs Patel, bathroom refit” or “Unit 4, rewire”.

With both labels in place, you get your tax return and your job profit from the same record. You will see quickly which jobs paid well and which ones looked good on the quote but leaked money through extra van trips and forgotten fixings.

What HMRC expects you to record

HMRC’s guidance on business records says you must keep a record of every expense, including the amount, the date it was incurred and the category. Receipts and invoices are your proof.

There are two points tradespeople often get wrong:

• You don’t send receipts with your return. You tell HMRC your total allowable expenses on the Self Assessment form and keep the proof. But if HMRC asks to see it, you need it.
• The clock runs from the deadline, not the purchase. You must keep records for at least five years after the 31 January submission deadline of the relevant tax year. A receipt for a tool bought in May 2026 is part of the 2026-27 tax year, so you would keep it well into 2032 and beyond. Our Self Assessment records checklist walks through what to store and for how long.

Pro tip: thermal paper receipts fade within months. If you only keep the paper, you may find a blank slip when you need it. A photo taken the day you buy is your insurance.

Cash basis or traditional accounting: why it changes your tracking

Most sole traders use the cash basis, where you record income and expenses when money actually moves. HMRC explains both methods in its records guide. For a tradesperson, the practical effect is that you don’t pay Income Tax on an invoice you have sent but not yet been paid for.

It also means the date of payment matters. When you pay a supplier, log it that day. When a customer pays you, log it that day. Invoices sitting unpaid are a cash-flow problem, but under the cash basis they are not yet a tax problem.

If you are unsure which method you are on, or whether to change, that is a question for an accountant, because the right answer depends on your turnover and your kit spend.

Four ways to track job expenses, compared

There is no single right system, only one you will actually use on a tired Friday. Here is how the main types compare.

A spreadsheet works if you are disciplined and have a quiet admin night every week. Most tradespeople aren’t, and that is no criticism: you are paid to fit boilers, not to type. That is why we built TradeTally around capturing the receipt in the moment, rather than asking you to catch up later.

A daily routine that takes five minutes

The best routine is one short enough that you do it every day. This one works from the cab.

1. Photograph every receipt at the counter or in the van. Do it before you start the engine. The receipt goes in the bin, or in one pocket, never loose in the footwell.
2. Tag it to the job. A receipt without a job is a cost you cannot recover on the next quote.
3. Pick the category. If you aren’t sure, choose the nearest one and add a note. You can refine it later.
4. Log the mileage. Start and end points, the purpose, the miles. Do it at the end of the day while you remember where you went.
5. Check the week on a Friday. Look for anything you paid for but didn’t record: a card payment at the merchant, a parking fee, a part ordered online.

The Friday check matters because bank statements are your safety net. If a payment appears on the statement and not in your records, you have found a gap while it is still easy to fix.

Keep personal and business spending apart

The quickest way to make tracking harder is to pay for everything from one account. A separate business account is not a legal requirement for a sole trader, but it makes the work much easier: every transaction on it is either income or a business expense, so the statement becomes a ready-made checklist.

When you do pay for something mixed, such as a trip that includes a personal errand, or a phone plan you use for both, record only the business part. Our guide to splitting personal and business expenses with snap receipts covers the common situations, from the weekly shop that includes work consumables to the family car that sometimes carries tools.

The costs tradespeople most often miss

Missing a legitimate cost means paying tax on money you spent. These are the ones that slip through.

Small consumables

Screws, tape, silicone, blades, sandpaper, cable ties. Each purchase is a few pounds, so nobody keeps the slip. Across a year they add up to a real sum. Photograph the receipt, even for a £4 pack.

Travel and vehicle costs

Fuel, parking, tolls and congestion charges for work journeys all count as travel costs. For a vehicle you use for work you can generally choose between claiming actual running costs and using HMRC’s simplified flat rates. The HMRC helpsheet HS222 notes that the flat rate is not always the most tax-efficient method, and the sensible approach is to compare it against your actual costs from time to time, especially when your travel pattern changes.

You can only compare if you have both sets of figures. That means logging mileage even if you plan to claim actual costs. Our pages on mileage log requirements and vehicle expenses for sole traders go into the detail.

Phone and internet

The business share of your mobile and broadband bills is an office cost. If you take on a dedicated line, the monthly cost is likely to be fully business. Comparing cheap business phone costs over 24 months shows how contract length changes what you really pay, which is worth knowing before you commit.

Working from home

If you do your quotes, invoices and ordering from home, a share of your household costs may be claimable. HMRC allows a simplified flat rate for this, and the same helpsheet advises weighing it against actual costs. Keep a note of how many hours a month you work from home so the figure is defensible.

Payments to subcontractors

If you use labour, your payments to subcontractors are a business cost, and under the Construction Industry Scheme CIS payments appear in the staff costs category HMRC lists. Keep each statement and match it to the job. When the number of subbies grows, dedicated subcontractor management software can help you see who has been paid for what, and when.

Insurance, tools and training

Public liability, tool cover and van insurance are insurance costs. Professional fees, including trade body memberships, are on the HMRC list too. Keep the annual documents with your monthly records so they don’t get lost in the post.

Making Tax Digital: why your records are changing

Making Tax Digital for Income Tax requires eligible sole traders to keep digital records and send quarterly updates to HMRC. The start date depends on your qualifying income, which is your gross turnover from self-employment and property, not your profit. According to HMRC’s introduction to the scheme:

• income over £50,000: start from 6 April 2026
• income over £30,000: start from 6 April 2027
• income over £20,000: start from 6 April 2028

A digital record is one created and stored using software, so a paper receipt book on its own won’t meet the rule. If your turnover is below the first threshold, you have a little time, but building the habit now means the switch will be uneventful. Check which date applies to you on HMRC’s page on who needs to use Making Tax Digital.

If you want to see what compatible software looks like for a one-person trade, our page on Making Tax Digital software for sole traders explains what we offer.

Our view: track the job, not just the tax

We built TradeTally because the admin that follows a day on site is the part of the job that gets neglected. Most advice treats expense tracking as a tax chore. We think that is the wrong frame.

A receipt is not just something for HMRC. It is the evidence of what a job really cost you. When you tag materials, mileage and time to each job, you stop guessing. You find out that the “quick” repair needed three trips to the merchant, or that a loyal customer’s jobs are your thinnest margins. You can price the next quote on facts, and you can answer a customer’s query about a charge with the receipt in hand.

The second thing we’ve learnt is that the system has to fit the van. If recording an expense takes more than 20 seconds, it won’t happen at 5pm on a wet Thursday. So the whole routine should be a photo, a job tag and a category, from your phone, before you drive off. Everything else, the totals, the tax-ready export, the profit view, should come from that single habit rather than from evenings at the kitchen table.

Finally, keep the tax side honest. Claim what you spent for the business, no more, keep the proof, and ask an accountant when something is unclear. Good records are your best protection if HMRC ever asks a question.

— Simon

Where TradeTally fits

TradeTally is a UK web and mobile app for sole traders in the trades. You snap a receipt, tag it to a job, log mileage and time, and see a live profit dashboard. Records are kept tax-ready, with an automatic SA103F export for Self Assessment, CIS deduction handling and MTD-ready record-keeping, plus easy exports to hand to an accountant. You can also send branded invoices and create quotes from the same place.

The Starter plan costs £0 per month, with limited invoicing. Professional is £12 per month, or £120 per year, for unlimited invoices, receipts and tax exports. You can start on the Starter plan and see whether it fits your routine, or compare the options on our pricing page. If you want to estimate what your year’s profit means for your tax bill, try our Self Assessment tax calculator.

For more on the receipt side, see our guide to digital receipts for sole traders, and for a wider overview, how to track business expenses as a sole trader.

A worked example: one bathroom refit

Here is how a single job looks when it is tracked properly. The figures are illustrative, to show the method, not real client data.

Add the five lines and the job’s direct costs come to £162.45. Now compare that with what you quoted for materials and travel. If the quote allowed £120, you know the next bathroom quote needs a larger allowance for materials and disposal, or a clear line saying extras are charged separately.

The same five lines also feed your tax return. At year end, the materials add up to one figure, travel to another, and the receipt photos sit behind each line. Nothing needs retyping.

Common mistakes to avoid

• Waiting until January. Memory fades, receipts fade quicker. Record on the day.
• Claiming personal costs. If it isn’t wholly and exclusively for the business, only the business part can go in.
• Throwing away records after one year. The minimum is five years after the 31 January deadline.
• Estimating mileage. A rough figure is hard to defend. Log it as you go.
• Mixing the money. Run business spending through a separate account where you can.
• Ignoring unpaid invoices. They affect your cash flow even if they aren’t taxed yet under the cash basis.

FAQ

What are the HMRC rules for expenses?

Expenses must be incurred wholly and exclusively for business purposes. You record the amount, date and category of each, and keep the proof. You report the totals on your Self Assessment return, but you don’t send receipts in unless HMRC asks.

How do I keep track of my expenses?

Use one method and use it daily. Photograph each receipt as you buy, tag it to a job, pick a category and log your mileage. A weekly check against your bank statement will catch anything you missed.

How long do I need to keep receipts?

At least five years after the 31 January submission deadline for the tax year in question. Digital copies are fine as long as they are clear and complete, and if Making Tax Digital applies to you, your records need to be digital anyway.

Can I claim mileage or actual vehicle costs?

Often you can choose between simplified flat rates and actual running costs, and HMRC’s helpsheet says the flat rate isn’t always the most tax-efficient. Log your mileage either way, compare the two figures each year, and speak to an accountant if your vehicle use is unusual.

Sources

• Expenses if you’re self-employed, GOV.UK
• How to claim expenses, GOV.UK
• Business records if you’re self-employed, GOV.UK
• HS222 How to calculate your taxable profits (2026), GOV.UK
• Use Making Tax Digital for Income Tax: Introduction, GOV.UK
• Use Making Tax Digital for Income Tax: Create digital records, GOV.UK
• Find out if and when you need to use Making Tax Digital for Income Tax, GOV.UK

Recommended

• How to Track Business Expenses as a Sole Trader
• Track profit on your phone: UK tradespeople’s weekly HMRC routine
• 55p per mile: UK sole traders’ mileage log template and HMRC rules
• Best Sole Trader Expense Software for Trades