Can I claim expenses from before I started trading?

Usually, yes. In 2026-27, running costs you paid up to 7 years before you started trading count as paid on your first day, if they would have been allowable then. Tools and vans follow their own rules.

Checked against the legislation, HMRC's manuals and GOV.UK on 17 October 2026.

The 7-year rule for running costs

Section 57 of the Income Tax (Trading and Other Income) Act 2005 covers costs you pay for a trade before you start it, as long as they are not more than 7 years before your start date. If a cost would not otherwise be allowed, but would have been allowed had you paid it on your start date, it is treated as paid on your start date. For example, public liability insurance, or flyers and business cards.

HMRC's Business Income Manual (BIM46351) adds three points:

• The normal test still applies: the cost must be wholly and exclusively for the business.
• The rule is for running costs. Equipment and other capital costs are dealt with through capital allowances instead.
• Stock bought in advance, and costs paid ahead such as rent in advance, are not covered by this rule, because they are deducted in the normal way once you are trading.

Tools and equipment bought for the business

Capital allowances have a matching rule. Section 12 of the Capital Allowances Act 2001 treats equipment you bought for a business you were about to start as bought on the first day you trade. HMRC's manual (CA23020) treats a hearse bought three months before a business started as bought on its first day.

So new tools bought for the trade can usually go into your annual investment allowance from day one. GOV.UK puts the allowance at £1 million a year.

If you use the cash basis, which GOV.UK calls the standard way for sole traders, equipment and vans you buy to keep and use in the business (unless you use the mileage rate for the van) are claimed as a normal expense rather than a capital allowance. Cars are the exception: they still go through capital allowances.

Things you already owned

Section 13 of the Capital Allowances Act 2001 covers tools or a van you already had. When you bring something you own into the business, you are treated as buying it on that day for its market value, or for what you paid if that is lower.

GOV.UK says you cannot use the annual investment allowance on items you owned for another reason before you started using them in your business, so under traditional accounting you claim writing down allowances instead. The main rate is 14% a year from 6 April 2026 for Income Tax. If you also use the item privately, HMRC's manual (CA27005) cuts the allowance by the private share. Its example is a privately owned van brought into a business and used 75% for work.

GOV.UK says that on the cash basis you can only claim capital allowances on cars, and its cash basis guide covers things you buy, not things you bring in. If you use the cash basis and have an item you already owned, check how it is treated before you claim it.

Training before you start

GOV.UK's training guidance gives the example of someone who trains to become a driving instructor and start their own business: they cannot claim the course, because it gives new skills for a business that does not yet exist.

Our guide on claiming training courses covers courses that update skills for a trade you already run.

Worked example: an electrician starting out

An electrician leaves a warehouse job and starts trading on 1 June 2026. Before that day they paid for these:

Under traditional accounting, in a full 12-month year, 14% of £9,000 is £1,260 before any cut for private use. GOV.UK says the figure is adjusted if your accounting period is shorter or longer than 12 months, so a first period shorter than 12 months gets a smaller share. This is an example only.

If you register for VAT

VAT has its own rule. VAT Notice 700/1 says that, subject to conditions, you can claim back VAT on goods bought for the business up to 4 years before your registration date that you have not used up or sold, and on services from not more than 6 months before. The claim goes on your first VAT return.

Start-up loan interest has its own rules too. Our guide on loan interest and van finance covers them.

What this means for you

Running costs from the 7 years before you started go in with your first year's expenses: HMRC's manual says they count in the profit or loss for the first tax year you trade, with no separate claim. New tools go through capital allowances, or are an expense on the cash basis. Under traditional accounting, things you already owned are claimed at market value through writing down allowances. The course that got you into the trade usually does not count.

Steps to claim your start-up costs

1. Note the date you started working for yourself. The self-employment pages of your first tax return ask for it.
2. List what you paid for the business in the 7 years before that date, with receipts.
3. Split the list into running costs, new equipment, things you already owned and training.
4. For things you already owned, write down a fair market value on your start date and how much you use each one privately.
5. Put the running costs and new equipment into your first year's figures.
6. Under traditional accounting, claim writing down allowances on things you already owned, reduced for private use.
7. If you register for VAT, check which purchases fall inside the 4-year and 6-month windows.

The free MTD check shows when Making Tax Digital starts for you, and the trades section has more guides.