Quick answer
Employees who buy, repair, or replace their own small tools can claim either an agreed flat rate (£60 standard, £120 for mechanics, plumbers, and electricians, £140 for joiners and carpenters) or the actual cost with receipts. Substantial equipment goes through the Annual Investment Allowance. The self-employed, including CIS subcontractors, deduct tools as business expenses: consumables as running costs, bigger kit through capital allowances. PPE and anything the employer reimbursed cannot be claimed.
Are tools tax deductible in the UK?
Yes, for both employees and the self-employed, through different doors. For employees, HMRC publishes a table of flat rate expenses by industry and occupation. The default is £60 a tax year for any job not specifically listed. Trades that get through more kit have higher figures: motor mechanics, plumbers and pipe fitters, and electricians can claim £120, while joiners, carpenters, and the constructional engineering trades can claim £140. The flat rate is deducted from taxable pay, so a basic-rate taxpayer on the £120 rate gets £24 back, and the claim can be backdated to cover the current tax year and the four before it.
If you spent more than the flat rate, you can claim the actual cost of repairing or replacing small tools you need for the job, such as scissors or an electric drill, by sending copies of receipts or other proof of payment. For substantial equipment, GOV.UK is explicit: you may be able to claim tax relief on the full cost because it qualifies for a type of capital allowance called the Annual Investment Allowance, provided you need it to do your job and there is no significant private use. Cars, motorcycles, and bicycles are excluded from that route and handled through mileage instead.
The self-employed have the simpler position. Tools are an ordinary business cost. Consumables and small hand tools go through as running expenses; anything with a useful life beyond the year is plant and machinery relieved under the AIA, which at up to £1 million a year is never going to be a constraint for a tool bag. Subcontractors registered under the Construction Industry Scheme are self-employed for this purpose and claim exactly the same way on the SA103, with their CIS deductions credited against the resulting tax.
How much can you claim?
Employees: the flat rate for your trade, or the actual cost with evidence. Worked example: an employed electrician buys a £95 tester and a £140 set of insulated screwdrivers in the year and keeps the receipts. Actual cost is £235, more than the £120 flat rate, so she claims £235 and gets £47 back at the basic rate. Her colleague who kept no receipts claims the £120 flat rate for £24.
Self-employed: the full business cost. A sole-trader carpenter spends £620 on blades, bits, and hand tools (running costs) and £3,400 on a track saw, router table, and dust extraction (plant). Both amounts are deducted in full in the year, the plant via the AIA, for a total deduction of £4,020.
| Claimant | Route | Evidence |
|---|---|---|
| Employee, small tools | Flat rate £60, £120, or £140 by trade | None |
| Employee, small tools above flat rate | Actual cost | Receipts |
| Employee, substantial equipment | AIA capital allowance | Receipts, no significant private use |
| Self-employed or CIS, consumables | Running expense | Receipts |
| Self-employed or CIS, plant | AIA capital allowance | Receipts, asset register |
| Anyone, PPE | Not claimable | Employer must provide |
Mixed use reduces the claim: a self-employed decorator who uses a pressure washer half the time at home claims half.
VAT on tools
A VAT-registered business reclaims the 20% VAT on tools as input VAT, restricted for private use. Many CIS subcontractors trade below the VAT threshold and simply deduct the VAT-inclusive cost for income tax. Builders’ merchants’ invoices below £250 count as simplified VAT invoices, so a till receipt showing the VAT number and rate is enough evidence.
Record-keeping requirements
Flat rate claims need no receipts. Actual cost claims and all self-employed claims need the receipt or invoice, and larger items belong in a simple asset register with the purchase date and business-use percentage. Keep employee records for at least 22 months after the end of the tax year, and self-employed records for 5 years after the 31 January deadline. Merchants’ apps and emailed receipts count as long as the record is complete; see the UK record-keeping guide.
How to claim, step by step
- Employees: find your trade on HMRC’s flat rate table; if your actual spend was higher and you have receipts, claim actual instead.
- Claim through your Self Assessment return if you file one, or online through HMRC’s employee expenses service or form P87 if you do not.
- For substantial equipment, claim the AIA on the same return, confirming no significant private use.
- Self-employed and CIS: deduct consumables as running costs on the SA103 and larger tools through the AIA.
- Reclaim input VAT if registered, apportioning for private use.
- Go back up to four years if you have never claimed; the relief is available for earlier years too.
Common mistakes
- Claiming the flat rate and actual costs in the same year.
- Including PPE such as safety boots or hi-vis, which cannot be claimed because the employer must supply it.
- Employees claiming tools the employer provided or reimbursed.
- CIS subcontractors leaving tool costs off the return and losing part of the refund their deductions would have produced.
- Self-employed traders expensing a £4,000 machine as “tools” without an asset register, then being unable to evidence disposal later.
Software that helps
- Dext captures merchant receipts from a phone photo so small tool purchases are not lost in a van.
- ExpenseFlow reads tool and merchant invoices with frontier vision AI, codes each line to an expense or fixed asset account using the Annual Investment Allowance framing, explains the call under the line, lowers its confidence so a reviewer decides when the invoice does not settle it, and syncs approved items to Xero or QuickBooks with the receipt attached.
- FreeAgent handles CIS deductions alongside expenses for subcontractors filing Self Assessment.
FAQ
See the answered questions above for flat rates, actual cost claims, substantial equipment, CIS subcontractors, and reimbursed tools.
From ExpenseFlow
VAT coding on autopilot
ExpenseFlow reads every receipt, assigns the right VAT treatment and account code, and syncs to Xero or QuickBooks Online once you approve.