Can I claim bank charges and card machine fees as a sole trader?

Yes. In 2026-27, bank and overdraft charges for your business are allowable, and in our reading so are card machine transaction fees. Record card takings before the provider's fee, then claim the fee as an expense.

Many trades take card payments on site, and each one has a cost. The rules below follow GOV.UK's guide to self-employed expenses, the cash basis guide, the Making Tax Digital guidance, the tax return notes and HMRC's Business Income Manual, as checked on 17 October 2026.

What you can and cannot claim

GOV.UK lists bank, overdraft and credit card charges, interest on bank and business loans, hire purchase interest, leasing payments and alternative finance payments as costs you can claim. It says you cannot claim repayments of loans, overdrafts or finance arrangements.

GOV.UK does not name card machine or online payment providers. In our reading, the fee a provider takes for processing a customer's payment is a financial charge, the same as a bank's card charges.

Recording fees taken before you are paid

Card providers and online payment services usually pay you the takings with their fee already taken off. If a customer pays £300 and the provider keeps £5, £295 lands in your account.

GOV.UK's Making Tax Digital (MTD) guidance covers this. If you only know your income after expenses are taken off, you ask what the full amount was, record the full amount as income, and record the expenses separately. The tax return notes also say turnover is the total received before taking off any expenses, including card payments.

So in the example, you record £300 of income and a £5 expense. Your profit is the same either way. In our reading, recording only £295 understates your turnover. Your income before costs is what HMRC uses to decide when MTD applies to you. GOV.UK warns that some transactions may not appear in full in your bank feed. Provider statements show the full amount and the fee.

The card reader itself

In our reading, a card reader is equipment you keep and use. On the cash basis, the standard method for sole traders, GOV.UK says equipment you buy to keep and use is claimed as a normal expense. With traditional accounting, equipment goes through capital allowances instead. Our guide to the annual investment allowance explains how.

Personal and business accounts

GOV.UK says you might be able to use a personal or business account for your business, and to check with your bank. Our guide on whether you need a business bank account covers that choice.

Whichever you use, only business costs count. GOV.UK says that for something used for both business and personal reasons, you can only claim the business costs. For a loan, overdraft or finance payment used partly for non-business reasons, the tax return notes put the non-business part in a disallowable box. HMRC's manual makes the same point for interest: where a loan is used partly privately, only the business share is allowable, split on a reasonable basis.

The £500 cash basis cap has gone

Before 2024-25, the cash basis limited interest and the costs of arranging borrowing to £500 a year, under sections 51A and 57B of the Income Tax (Trading and Other Income) Act 2005. Both were removed from the 2024-25 tax year. In our reading, it never covered everyday bank charges or card fees. GOV.UK's cash basis guide now lists interest and bank charges, such as interest on bank overdrafts, as allowable expenses. For loans and van finance, see our guide to claiming interest.

What is not allowable

• Repayments. Paying off an overdraft, loan or finance agreement is not a cost, says GOV.UK. Only the interest and charges are.
• Late payment interest from HMRC. Section 54 of the 2005 Act and HMRC's manual say interest on late paid Income Tax and Capital Gains Tax is not deductible.
• Penalties and fines. GOV.UK says you cannot claim fines for breaking the law. Section 54 bars many HMRC penalties, and HMRC's manual says penalties not on that list are still unlikely to be business costs.
• Personal spending. GOV.UK says allowable expenses do not include money taken from the business for personal use.

A worked example

A self-employed electrician on the cash basis takes £24,000 by card in 2026-27. The card provider takes £420 in fees before paying out, so £23,580 reaches the bank.

The claimable costs come to £543 (£420 + £84 + £39). Recording £24,000 of takings with the £420 fee gives the same profit as recording £23,580, but shows the true turnover. This is an example only.

What this means for you

Bank and card fees reduce your taxable profit when they are for the business, unless you take the £1,000 trading allowance instead of claiming expenses. The main trap is the payout: record takings in full and the fee as a cost.

Steps to claim bank and card fees

1. Download the year's statements from your bank and each card or online payment provider.
2. Record each payout's full takings as income and the provider's fee as an expense.
3. Take out personal account fees and the private share of anything used for both.
4. Leave out loan and overdraft repayments, HMRC interest, penalties and fines.
5. Record bank charges and, in our reading, card fees under "Bank, credit card and other financial charges", and loan interest under "Interest on bank and other loans". These are the MTD category names, and boxes 26 and 25 in the notes to the 2025-26 full self-employment pages.

With self-employed turnover under £90,000, GOV.UK says you can choose to just mark each MTD record as income or an expense. The free MTD check shows when MTD starts for you, and the trades section has more guides.