If you’re in the process of setting up as a sole trader, you may have already spent money on tools, software, marketing, or equipment – before officially registering with HMRC.
The short answer is yes – in many cases, HMRC allows you to claim certain pre-trading expenses, provided they meet the criteria.
This guide explains what the rules say, which costs are eligible, how far back you can go, and how to include them in your first Self Assessment tax return.
What HMRC says about pre-trading expenses
According to HMRC’s Business Income Manual:
“Expenditure incurred up to 7 years before the commencement of the trade… may be deductible if it would have been allowed as a deduction if incurred after the trade had started.”
Source: BIM46351 – Pre-trading expenditure
In simple terms: if a cost is something you could have claimed had your business already been trading, and it’s directly related to the business, you can normally claim it – even if you incurred it before registering with HMRC.
How far back can you claim?
The rules allow you to claim qualifying expenses incurred in the seven years before your official start date – as long as the cost:
- Was incurred wholly and exclusively for the business
- Is not capital in nature (unless it qualifies for capital allowances)
- Hasn’t already been claimed or used elsewhere
The expense must also relate directly to the same trade or profession that you will later begin. If your business plan has undergone significant changes, the earlier cost may no longer be eligible.
Find out more in our guide — what counts as your business start date.
Examples of pre-trading expenses you can claim
| Expense type | Allowable? | Notes |
|---|---|---|
| Laptop or tools bought for the business | Yes | Claim via capital allowances (usually AIA) if the asset is used in the trade once you start. |
| Business-related training course (taken before trading) | No | HMRC does not allow pre-trade training as a deductible expense. After you start, only maintenance/update training is usually allowable. |
| Website hosting or setup costs | Yes | Ongoing hosting is generally revenue and allowable. Initial build/setup can be capital; treat appropriately for tax and relief. |
| Software subscriptions | Yes | Allowable when used for the business; exclude any personal use. |
| Stock purchased in advance | Yes | Treated as opening stock in your first accounts/return. |
| Travel to meet a future client | Generally yes | Allowable if the travel is wholly for the forthcoming trade (not speculative or personal). Keep evidence linking it to first contracts. |
| Office furniture or equipment | Yes | Typically relieved via capital allowances if used in the business after you start trading. |
Laptop or tools bought for the business
Allowable? Yes
Notes: Claim via capital allowances (usually AIA) if the asset is used in the trade once you start.
Business-related training course (taken before trading)
Allowable? No
Notes: Pre-trade training isn’t deductible. After you start, only maintenance/update training is usually allowable.
Website hosting or setup costs
Allowable? Yes
Notes: Ongoing hosting is revenue and allowable. Initial build/setup may be capital; treat accordingly.
Software subscriptions
Allowable? Yes
Notes: Allowable when used for the business; exclude personal use.
Stock purchased in advance
Allowable? Yes
Notes: Treated as opening stock in your first accounts/return.
Travel to meet a future client
Allowable? Generally yes
Notes: Allowable if wholly for the forthcoming trade. Keep evidence that links the trip to first contracts.
Office furniture or equipment
Allowable? Yes
Notes: Usually relieved via capital allowances if used in the business after you start.
How to include pre-trading expenses in your tax return
When you file your first Self Assessment tax return, you’ll include these expenses in the “self-employment” section – just as if they had been incurred after your business began.
If you’re using the simplified cash basis, you’ll include the total cost when the item was paid for. If you’re using traditional accrual accounting, you may need to apportion the cost based on use or timing.
It’s a good idea to keep a separate record of all pre-trading expenses – including:
- Date of the transaction
- Amount paid
- Receipt or invoice
- Purpose and how it relates to the business
These can be recorded as a lump sum adjustment at the start of your business accounts, or as individual entries, depending on your software or accountant’s advice.
Can you reclaim VAT on pre-trading expenses?
If you later register for VAT, you may be able to reclaim VAT on:
- Goods purchased within 4 years – if still in use at registration
- Services bought within 6 months – if used to make taxable supplies
HMRC states: “You can reclaim VAT on goods you bought up to 4 years before registration (as long as they’re still in use), and on services bought up to 6 months before registration.”
More detail is available at: GOV.UK VAT guidance
Final notes
If you’re just getting started as a sole trader, it’s worth reviewing your recent business-related spending carefully — you may be able to claim more than you think.
Just make sure the expense is:
- Wholly and exclusively for the trade
- Within the 7-year rule
- Still relevant to the business you went on to run
- Not personal or mixed-use (unless you apportion it fairly)
For full HMRC guidance, see: BIM46351 – Pre-trading expenditure
Need help deciding your official start date? Read:
What counts as your business start date?
If you’re starting a limited company, the pre-trading expense rules are similar. However, purchases must be made in the company’s name or formally transferred to it. See our guide to limited company expenses for more details.
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