Can I claim legal fees and debt collection costs as a sole trader?

Yes, if the work is for the business. In 2026-27 a solicitor's fee for chasing an unpaid invoice counts, and in our reading so does the court fee, from £35. Fines and legal costs of buying property do not.

GOV.UK says accountancy, legal and other professional fees can count as allowable business expenses for the self-employed. The test is the usual one: the cost has to be for the business, and not capital. This guide covers solicitors, chasing money you are owed, court claims and what you cannot claim. The rules below follow GOV.UK and HMRC's manual as checked on 17 October 2026.

What you can claim

GOV.UK lists hiring accountants, solicitors, surveyors and architects "only for business reasons", and professional indemnity insurance premiums. For a trade, that typically covers:

• a solicitor's letter to a customer who has not paid
• a solicitor or other professional in a dispute about your work or a contract
• in our reading, a debt collection agency's fee for recovering money owed for your work
• in our reading, the court fee for a money claim against a customer

HMRC's manual says professional fees are not allowable if they are capital, or not incurred wholly and exclusively for the trade. It treats fees for pursuing debts of a capital nature as capital. An unpaid invoice for a job is a trade debt, so in our reading the cost of chasing it is a running cost.

What you cannot claim

GOV.UK says you cannot claim for:

• legal costs of buying property and machinery (under traditional accounting these go through capital allowances)
• fines for breaking the law
• the cost of preparing and submitting your Self Assessment tax return

The tax return notes add that the costs of settling tax disputes are disallowable. Legal costs for personal matters, such as buying your home, are not business costs. Our accountancy fees guide covers what an accountant's bill can include.

HMRC's manual also says that in court proceedings, whether you win or lose does not decide whether the fees are deductible. What matters is the nature of the claim.

Chasing a business customer who pays late

If your customer is a business, the late payment law lets you add to what you are owed. GOV.UK says that if no payment date is agreed, payment is late 30 days after the customer gets the invoice or the work is done, whichever is later. You can then charge:

You can also charge statutory interest of 8% plus the Bank of England base rate, unless your contract sets a different rate. GOV.UK says to send a new invoice if you add interest. In our reading, the fixed sum is business income and any interest you are paid is taxable, and under the cash basis you count them when you receive them.

Court claims

In England and Wales you can claim money you are owed through the county court, online or by post. Scotland and Northern Ireland have their own processes. The fee depends on the amount claimed plus interest:

GOV.UK also says mediation could be quicker and cheaper than going to court.

If the customer does not pay

Under the cash basis, the standard way to keep sole trader accounts, you only count money you have actually received, so an unpaid invoice was not in your income. GOV.UK says bad debts cannot be claimed on the cash basis for that reason. Under traditional accounting you can claim a debt included in your turnover if you are sure it will not be recovered. Our guide on what happens when a customer does not pay has the detail.

A worked example

A self-employed electrician on the cash basis is owed £2,400 by a business customer for a fit-out. In 2026-27 they pay a solicitor £150 for a letter, then make a court claim for £2,400 with a £115 fee. They also pay a solicitor £600 in a dispute over another contract, and £1,200 for the legal work on buying their home.

The claimable costs come to £865 (£150 + £115 + £600). When the customer pays the £2,400 and the £70 fixed sum, £2,470 goes into income in the year it arrives, in our reading for the £70. This is an example only.

What this means for you

Legal and debt costs for your work reduce your taxable profit, unless you take the £1,000 trading allowance instead of claiming expenses. The traps are fines, personal legal bills and legal costs of buying property or equipment.

Steps to claim legal and debt costs

1. Keep the solicitor's, agency's and court's invoices and receipts, with a note of which job or customer each relates to.
2. Leave out fines, personal legal costs and the cost of your tax return.
3. Record the costs under "Accountancy, legal and other professional fees", box 28 in the notes to the 2025-26 full self-employment pages.
4. If you include any disallowable part in box 28, also put it in box 43.
5. Under the cash basis, record money you recover, including any fixed sum, as income when you receive it. In our reading, late payment interest you receive is taxable too.

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