Allowable Expenses for Self-Employed Tradespeople: What You Can Claim

Quick Answer: As a self-employed tradesperson you can deduct expenses that are "wholly and exclusively" for your business — materials, tools, PPE, van running costs, insurance, phone, software (such as quoting apps), accountancy fees and a use-of-home allowance — which reduces the profit you pay tax on. You can use actual costs or HMRC's simplified (flat-rate) expenses, including mileage at 45p per mile for the first 10,000 business miles and 25p thereafter for cars and vans. Larger purchases like a van or plant are claimed as capital allowances (usually the Annual Investment Allowance), not as everyday running costs.

Summary

Every pound you legitimately claim as a business expense is a pound that is not taxed. For a sole trader, allowable expenses are subtracted from your turnover to give your taxable profit; income tax and National Insurance are then charged on the profit, not the turnover. The single test HMRC applies is whether the cost is "wholly and exclusively" incurred for the business. Tools, materials, van fuel and trade insurance pass easily. Things you'd buy anyway as a private individual — everyday clothes, your normal commute, lunch on an ordinary working day — generally do not.

There are two ways to claim running costs: actual costs (keep every receipt and claim the real figure, apportioning anything used partly privately) or HMRC's simplified expenses (use published flat rates for vehicle mileage, use of home, and living at your business premises, so you don't have to split bills). You can mix some methods, but once you use flat-rate mileage for a particular vehicle you must keep using it for that vehicle. Most sole-trader tradespeople find mileage at the flat rate simpler than logging every fuel, servicing and insurance cost and apportioning private use.

Capital items are different again. A van, a cement mixer, a powerful SDS drill or a laptop are assets that last, so they go through capital allowances. The Annual Investment Allowance lets you deduct the full cost of most qualifying plant and machinery (including a van) in the year you buy it, up to a generous annual limit. This article covers what's allowable, what isn't, simplified vs actual, capital allowances, the CIS interaction, the VAT threshold, and the record-keeping you must keep under Making Tax Digital. Treat every figure that affects tax as something to confirm against current HMRC guidance — rates and thresholds change.

Key Facts

• The test — an expense is allowable only if incurred wholly and exclusively for the business; mixed-use costs (phone, car) must be apportioned to the business share.
• Materials and stock — timber, fixings, cable, copper, sand, cement and all job materials are fully allowable.
• Tools and small equipment — hand tools, blades, drill bits and small power tools used up or low value are revenue expenses; expensive durable plant goes through capital allowances.
• PPE and protective clothing — hi-vis, hard hats, safety boots, gloves, ear defenders, knee pads and branded workwear/uniform are allowable; ordinary everyday clothing is not.
• Van running costs — fuel, insurance, road tax, servicing, repairs, MOT and breakdown cover are allowable (actual method), or use flat-rate mileage instead.
• Mileage (simplified) — 45p/mile for the first 10,000 business miles, 25p/mile after for cars and vans; you cannot also claim actual running costs for that vehicle.
• Insurance — public liability, employer's liability (if you have staff), tools-in-transit and professional indemnity premiums are allowable.
• Phone, broadband, software — the business share of mobile, internet and subscriptions such as quoting/invoicing apps, cloud storage and accounting software is allowable.
• Accountancy and professional fees — accountant, bookkeeper and certain professional/trade subscriptions are allowable.
• Use of home — a proportion of household costs if you do admin/quoting from home, by actual apportionment or HMRC's simplified flat rate based on hours worked.
• Training — courses that update or maintain existing skills are allowable; courses to acquire a wholly new trade may be treated as capital/not allowable.
• Subsistence — food and drink only when away from your normal base on business (e.g. a job in another town/overnight), not ordinary daily lunch.
• Not allowable — ordinary clothing, normal home-to-base commuting, client entertaining, fines/penalties (e.g. parking/speeding), and the private share of any mixed cost.
• Capital allowances / AIA — vans, mixers, scaffolding, larger plant and machinery claimed via the Annual Investment Allowance, deducting the full qualifying cost in the year of purchase, up to the annual limit.
• VAT registration — you must register for VAT once taxable turnover exceeds the threshold (commonly cited around £90,000) on a rolling 12-month basis.
• CIS — under the Construction Industry Scheme, contractors deduct tax from subcontractors' labour at 20% (registered) or 30% (unregistered) before paying them; this is an advance on your tax, reclaimed via your return.
• Making Tax Digital (MTD) — digital record-keeping and quarterly updates are being rolled out for self-employed income tax (MTD for Income Tax); check whether your turnover brings you in and from when.
• Record retention — keep business records for at least 5 years after the 31 January submission deadline of the relevant tax year.

Quick Reference Table

Detailed Guidance

Simplified vs actual costs

You can claim running costs two ways. Actual costs means totalling the real spend — every fuel receipt, the insurance, the servicing, the road tax — and claiming the business proportion (so if the van is 90% work and 10% personal, you claim 90%). Simplified expenses lets you skip the apportionment by using HMRC's flat rates: mileage for vehicles, an hours-based flat rate for working from home, and a flat deduction if you live on your business premises.

Choosing vehicle method:
  High mileage, cheap-to-run van? -> compare both; actual may win
  Lower mileage / want simplicity? -> flat-rate mileage usually easier
  Once you pick flat-rate mileage for a vehicle -> stick with it for that vehicle

The flat-rate mileage figure (45p/25p) is meant to cover fuel and wear, insurance and servicing combined — so you cannot also claim those actual costs for the same vehicle. Run both numbers for your first year to see which is better, then commit.

Capital allowances and the Annual Investment Allowance

Anything that's a lasting asset rather than a consumable is "capital." Your van, a cement mixer, scaffolding, a generator, a laptop — these are claimed through capital allowances, not as ordinary expenses. The Annual Investment Allowance (AIA) is the route most tradespeople use: it lets you deduct the full cost of qualifying plant and machinery (including a commercial van) against profit in the year you buy it, up to a generous annual limit. A car is treated differently (it gets writing-down allowances based on emissions, not full AIA) — but a van counts as plant and qualifies. Confirm the current AIA limit and the car rules before relying on them.

Use of home

If you do your quoting, invoicing, ordering and paperwork at home, you can claim a share of household running costs (heat, light, broadband, council tax, etc.) by genuine apportionment, or take HMRC's simplified flat rate based on the number of hours a month you work from home. The flat rate is simpler and avoids arguments over apportionment; the actual method can be worth more if you have a dedicated room and high bills. Don't claim a full room exclusively for business if it risks a capital gains issue on sale — the flat rate sidesteps that.

The CIS interaction

If you work as a subcontractor in construction, the Construction Industry Scheme means the contractor deducts tax from your labour (not materials) before paying you — 20% if you're CIS-registered, 30% if not. Those deductions are an advance payment of your income tax and Class 4 NIC. You still claim all your allowable expenses on your Self Assessment return as normal; the CIS deductions are then offset against your final tax bill, and an overpayment is refunded. Keep every CIS deduction statement — they are your proof of tax already paid.

VAT and the registration threshold

You must register for VAT once your taxable turnover crosses the threshold (commonly cited around £90,000 over a rolling 12 months — confirm the current figure). Once registered you charge VAT on your invoices and reclaim VAT on purchases. Below the threshold you can register voluntarily, which can be worth it if your customers are VAT-registered businesses, but adds admin. Check the current threshold and the rules each year.

Record-keeping and Making Tax Digital

Keep records of all income and expenses, mileage logs, CIS statements, and receipts. Under Making Tax Digital for Income Tax, affected self-employed people must keep digital records and send quarterly updates using compatible software — the rollout is phased by turnover, so confirm whether and when it applies to you. Either way, retain records for at least five years after the relevant 31 January submission deadline. Good digital records make the flat-rate-vs-actual comparison trivial and protect you in an enquiry.

Frequently Asked Questions

Can I claim my work boots and overalls?

Yes — safety boots, hi-vis, hard hats, gloves and branded/uniform workwear are protective or business clothing and are allowable. What you cannot claim is ordinary clothing you could wear day to day (jeans, plain T-shirts, a fleece), even if you only ever wear them on site. The line is protective/uniform vs everyday.

Can I claim the cost of buying my van?

Not as an ordinary expense — a van is a capital asset, so you claim it through capital allowances, typically the Annual Investment Allowance, which usually lets you deduct the full cost in the year of purchase. The running costs (fuel, insurance, servicing) are separate and are either actual costs or covered by flat-rate mileage. Don't double up.

Is my daily drive to site an allowable expense?

Ordinary commuting from home to a regular base is not allowable. But travel from home or base to different job sites, between jobs, and to suppliers is business travel and is claimable (via mileage or actual costs). Tradespeople who travel to varying sites usually have far more allowable travel than someone with a fixed workplace — keep a mileage log to prove it.

Can I claim lunch?

Only when you're genuinely away from your normal area on business — for example a job in another town or an overnight stay. Your ordinary daily lunch while working locally is not allowable, because you'd eat regardless. Keep receipts for the trips that do qualify.

Should I register for VAT before I have to?

Only if it benefits you. If most customers are VAT-registered businesses they reclaim the VAT you charge, so voluntary registration lets you reclaim VAT on your own purchases at no real cost to them. If your customers are mostly homeowners who can't reclaim, adding VAT makes you 20% dearer — usually wait until you must register. Confirm the current threshold first.

Do I need an accountant?

Not legally, but the fee is itself an allowable expense, and a good accountant typically saves more than they cost by getting capital allowances, the home allowance and the flat-rate-vs-actual choice right — and by keeping you compliant with Making Tax Digital. For a busy sole trader it's usually money well spent.

Regulations & Standards

• HMRC — Expenses if you're self-employed — defines allowable business expenses and the "wholly and exclusively" test.

• HMRC — Simplified expenses for the self-employed — flat rates for vehicles (mileage), use of home, and living at business premises.

• HMRC — Capital allowances and the Annual Investment Allowance — how to claim plant, machinery and vans against profit.

• Construction Industry Scheme (CIS) — deduction of tax from subcontractors' labour by contractors (20%/30%).

• Making Tax Digital for Income Tax — digital record-keeping and quarterly reporting obligations for affected self-employed taxpayers.

• VAT registration — the turnover threshold and obligations for charging and reclaiming VAT.

• Expenses if you're self-employed — HMRC guide to allowable expenses

• Simplified expenses if you're self-employed — flat-rate mileage, use of home, premises

• Claim capital allowances — Annual Investment Allowance and plant/machinery

• Construction Industry Scheme (CIS) — subcontractor deductions and reclaiming

• Register for VAT — threshold and registration rules

• Making Tax Digital for Income Tax — digital records and quarterly updates

• self employment tax — how income tax and National Insurance work for sole traders

• cis construction industry scheme — CIS registration, deductions and reclaiming in detail

• vat for trades — VAT registration, charging and reclaiming for tradespeople

• making tax digital for tradespeople — digital record-keeping and quarterly reporting