This category covers the money you spend getting your name in front of customers — adverts, flyers, website promotion. But its name hides a trap: although business entertainment sits in the heading, entertaining clients is almost never something you can claim.
The entertainment trap catches almost every new sole trader. People remember their old employer paying for client lunches and assume the same applies to them. It doesn't: business entertainment is not deductible for the self-employed, whoever the guest is.
Mixed invoices cause the next problem. A trade show bill for a £500 stand plus £130 of hospitality is not £630 of advertising — the £500 goes in this category and the £130 goes nowhere. Record the whole invoice and you have quietly overstated your expenses for the quarterly update.
Finally, small recurring ad spend goes missing. A £60 boosted post each month is £720 a year of perfectly claimable advertising — set aside ten minutes at the end of each quarter to sweep the bank statement for anything you've missed.
Select Advertising and business entertainment for anything that promotes the business. Keep entertainment out of your expense totals entirely, or log it with a clear note saying "entertainment — not claimable" so your accountant can strip it out before your final declaration.
Track all your expenses in HMRC's own categories with the MTD Sole Trader Tracker.
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