Advertising costs
for sole traders

Advertising and business entertainment costs is box 24 on the full self-employment pages. The allowable part is advertising and marketing: adverts, leaflets, mailshots, free samples, website costs and sponsorship with a business purpose. Entertaining clients and hospitality share the box on the form, but they are disallowable, so they also go in box 39. This page covers the advertising side.

What goes in this category

• Adverts in print, online and in directories, and social media promotion.
• Leaflets, mailshots, business cards, signage and free samples.
• Website costs, marketing agencies and designers.
• Sponsorship with a genuine business purpose, and branded gifts within the rules.

What does not

• Entertaining clients, suppliers and customers.
• Event hospitality.
• Gifts other than small branded items.
• Sponsorship with any personal purpose, and charitable donations.

Items in this category

Marketing that is allowable

The law does not judge whether marketing works. A campaign that brings in no customers is just as allowable as one that doubles sales. What matters is that the spending was to promote the business. The exceptions come from specific rules, mainly on entertaining and gifts, and from the general rule that personal purposes rule a cost out.

Websites

Hosting, domains, builder subscriptions and updates are running costs. HMRC compares a website to a shop window: building it can be capital, changing the display is revenue. For most small businesses, the whole cost is deducted; larger bespoke builds may go through capital allowances on traditional accounting.

Sponsorship

Sponsorship is allowable when it is paid wholly for business promotion. HMRC's manual says that if there is any non-business purpose, even alongside a business one, no deduction is due. Sponsoring your child's team is the classic example of a sponsorship that fails.

Gifts and samples

Free samples of your own products are allowable. Other gifts are disallowed unless they carry a conspicuous advert, cost £50 or less per recipient in the year and are not food, drink, tobacco or vouchers.

Signage, livery and long-lasting items

Signs, van livery and display stands are advertising, but a permanent sign or display fixed to premises can be plant, relieved through capital allowances on traditional accounting. On the cash basis, most of these are expenses when paid.

Landlords

Landlords can deduct advertising for new tenants, such as property portal listings, in other allowable property expenses, box 29 of the UK property pages, or as part of letting agent fees.

Trade shows and networking

Exhibition stands, stand design and tickets to trade and networking events are allowable. Hospitality you provide at your stand, such as drinks for visitors, is business entertainment. Your own travel to a trade show follows the business travel rules.

Influencers and affiliates

Payments to influencers for agreed promotion, and commissions to affiliates who refer customers, are allowable marketing or sales costs. Gifting products without an agreed promotion can be a gift rather than advertising, and gifts of your own products as samples are allowable only where they advertise those products.

Free and discounted work

Doing a job for free or at a discount to win future work is not an expense: you simply have less income. The materials you use are still allowable costs. Do not record the full price as income and a matching marketing expense, which would inflate both figures without changing the profit.

Promotional events for the public

Running a stall, a demonstration or an open day is marketing, and costs such as stall fees, display materials and leaflets are allowable. Free food and drink handed out to visitors is hospitality, disallowed as entertainment, unless it is a sample of your own products given to advertise them.

Directories, reviews and lead platforms

Paid listings on trade directories, review sites and lead generation platforms, where you pay per lead or per month, are allowable marketing costs. Membership of a trade association that includes a directory listing is a subscription, also allowable. Paying for leads that never turn into work is still allowable, because the test is purpose, not results.

Records to keep

Keep invoices and copies of adverts, screenshots of online campaigns, and a note of what each sponsorship or promotion gave the business in return. For branded gifts, keep a list of recipients so the £50 limit can be checked.

VAT on advertising

If you are VAT registered, you reclaim VAT on advertising in the normal way and claim the net cost. Online ad platforms based abroad may charge you under the reverse charge. VAT on entertaining is generally blocked.

Worked example: a plumber’s box 24

A plumber spends £1,400 on search ads, £300 on leaflets, £450 on van livery, £240 on a website builder and £160 on branded pens for customers, and £250 on a supplier's Christmas lunch. Box 24 is £2,800, of which £250 goes in box 39 as disallowable entertaining.

Four questions before a cost goes here

1. Was it for the business, and only for it? A cost must be incurred wholly and exclusively for the trade. A cost with a personal purpose that cannot be separated is not allowable at all.
2. Is part of it personal? Where a business part can be identified, such as business miles or business calls, claim that part on a reasonable basis and leave the rest out.
3. Is it a running cost or something you keep? Running costs belong in the expense categories. Things you keep are capital: an expense on the cash basis (except cars), capital allowances on traditional accounting.
4. Is there a specific rule? Some costs are disallowed whatever their purpose, such as fines and client entertaining, and some have their own treatment, such as cars, which always go through capital allowances.

Trading allowance or expenses

Instead of deducting expenses, a sole trader can claim the £1,000 trading allowance against trading income. You cannot claim both, so the allowance only helps when your allowable expenses are under £1,000. If your gross trading income is £1,000 or less, the allowance covers it and you may not need to register. Once your costs pass £1,000, deducting actual expenses gives the lower profit.

This category in Making Tax Digital

Under Making Tax Digital for Income Tax, each quarterly update carries your expenses in the same 15 categories as the full self-employment pages, so this category is one line of every update. Sole traders with qualifying income over £50,000 join from 6 April 2026, falling to £30,000 from April 2027 and £20,000 from April 2028. If your turnover is under £90,000 you can send one consolidated expenses figure instead of the categories, but you still keep the records behind it. The same £90,000 limit decides whether you can use the short self-employment pages (SA103S), which ask only for total allowable expenses.

Cash basis or traditional accounting

Which accounting basis you use changes when a cost in this category counts, and sometimes whether it counts as an expense. On the cash basis, now the default, you deduct costs when you pay them and most things you buy to keep are ordinary expenses (cars being the exception). On traditional accounting, you deduct costs when you incur them and claim capital allowances for things you keep.

The disallowable column

The full self-employment pages have a second column of boxes (32 to 45) for disallowable expenses. If your accounts include something that is not allowable, such as the private share of a phone bill or client entertaining, you put the total cost in the expense box and the disallowable part in the matching box, so the tax calculation adds it back. The short pages (SA103S) simply ask for allowable expenses, so you leave the disallowable part out.

How much an allowable cost saves

Each pound of allowable expense saves a sole trader 26p at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate, in England, Wales and Northern Ireland. Scottish Income Tax bands differ, and the sole trader tax calculator works out your own figure.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep the invoice or receipt for every cost in this category, with a note of the business purpose wherever it is not obvious, and how you worked out the business share of anything also used privately. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 keep digital records and send quarterly updates under Making Tax Digital, falling to £30,000 from April 2027 and £20,000 from April 2028.

Common mistakes

• Including client entertaining as advertising without the box 39 adjustment.
• Claiming sponsorship with a personal connection.
• Claiming food or drink gifts.

Every other category

The other 14 categories on the self-employment pages, in box order:

• Cost of goods sold, SA103F box 17
• Construction industry payments to subcontractors, SA103F box 18
• Wages, salaries and other staff costs, SA103F box 19
• Car, van and travel expenses, SA103F box 20
• Rent, rates, power and insurance costs, SA103F box 21
• Repairs and maintenance of property and equipment, SA103F box 22
• Phone, stationery and other office costs, SA103F box 23
• Business entertainment, SA103F box 24, disallowed in box 39
• Interest on bank and other loans, SA103F box 25
• Bank, credit card and other financial charges, SA103F box 26
• Irrecoverable debts written off, SA103F box 27
• Accountancy, legal and other professional fees, SA103F box 28
• Depreciation and loss or profit on sale of assets, SA103F box 29, disallowed in box 44
• Other business expenses, SA103F box 30

The A to Z of expenses lists every item and all 23 categories: the 15 self-employment categories and the 8 for UK property.