Allowable Tools Expenses for UK Sole Traders: What You Can Claim

If you are a self-employed tradesperson, you can usually deduct the business cost of tools from your profits, but how you claim depends on your accounting method. Under cash basis, which is the default for sole traders, most tool purchases go straight in as expenses. Under traditional accounting, you claim capital allowances instead. Either way, you only claim the business-use share, and you need proof of what you bought and why.

This guide covers what counts as a tool expense, the difference between a repair and a replacement, what to do with tools you also use at home, and how to keep records that stand up if HMRC asks questions.

TL;DR

• Under cash basis, most tool purchases are allowable expenses. Under traditional accounting, you claim capital allowances such as the Annual Investment Allowance (AIA) instead.
• Repairing a tool is generally an allowable expense. Replacing the whole unit, or upgrading it, is capital expenditure.
• If a tool is used for both work and personal projects, you claim only the business percentage.
• You do not send receipts with your return, but you must keep them. Depreciation is never claimable.
• If you claim the £1,000 trading allowance, you cannot also deduct individual expenses.

Table of Contents

• Which accounting method are you on?
• What counts as an allowable tool expense
• Repair or replacement? The trap that catches tradespeople
• Tools you also use at home
• Why depreciation is never an expense
• The £1,000 trading allowance and your tool costs
• What if you are an employee, not a sole trader?
• Keeping records HMRC will accept
• Perspective: what we see on the van floor
• Keeping tool costs tidy with TradeTally
• Mistakes to avoid at year end
• FAQ
• Sources

Which accounting method are you on?

Before you decide whether a drill or a pipe bender is an expense, you need to know how your accounts are prepared. The SA103F notes for 2026 set out the two routes, and the tool rules differ between them.

GOV.UK explains that with cash basis you only record income or expenses when you receive money or pay a bill. For most trades that is the simpler option, because the tax you pay follows the cash you actually have. If you want a plain-English walk-through of how it affects your year-end, see our piece on cash basis accounting for UK trades.

Traditional accounting is not wrong. It gives a truer picture of what customers owe you and what you have committed to spend, which can matter as a business grows. If you choose it, write down why, so you can explain your approach to an accountant or HMRC later.

What counts as an allowable tool expense

An allowable expense is a cost incurred wholly and exclusively for the business. GOV.UK says you can claim items you would normally use for less than two years as allowable expenses. For tradespeople, that translates into a practical working list.

Hand tools and consumables

Screwdrivers, spanners, hand saws, chisels, drill bits, blades, sanding discs and similar items wear out or get lost fast. Under cash basis they are straightforward expenses. Under traditional accounting, low-value tools that you would expect to replace within a couple of years are generally treated as running costs too, but check with your accountant if you are unsure where your line falls.

Power tools and larger equipment

Cordless drills, SDS hammers, tile saws, pipe threaders, test meters and ladders last longer and cost more. Under cash basis, the cost is usually deducted in the year you pay for it. Under traditional accounting, you add them to your capital allowances claim. The AIA gives 100% deduction on qualifying plant and machinery up to the £1 million limit, which is far above what a sole trader buys in a typical year.

Safety equipment and workwear

Protective gear needed for the job, such as safety boots, hi-vis, gloves and eye protection, is a separate category from tools but is often claimed in the same breath. Keep the receipts together with your tool purchases. Ordinary clothing you could wear anywhere is not allowable, even if you only wear it on site.

Software and phone costs linked to the tools

If you use a tablet or phone to run quotes, take photos of work or record test results, the business share is claimable. The same apportionment rule applies as for any dual-purpose item, covered below.

Repair or replacement? The trap that catches tradespeople

The most common mistake is calling a replacement a repair. HMRC’s Business Income Manual at BIM35430 sets out the principle: the cost of repairing an asset is normally allowable revenue expenditure, but improving it or changing its character is capital.

In practice:

• Repair: replacing a worn chuck on a drill, a new blade on a saw, a service on a compressor, a new battery pack. You are restoring what the tool already did.
• Capital: buying a new compressor because the old one is beyond economic repair, or fitting an upgrade that gives the tool a function it did not have before.

The manual treats the question as one of fact and degree, so there is no rigid cut-off. That is why a short note matters. If you replace a part, jot down what failed, what you replaced and that the tool does the same job as before. Attach it to the invoice from the repairer or supplier.

Repairs and maintenance on tools you use for the business are generally allowable whichever accounting method you use, provided they are not for private use. If part of a repair relates to non-business use, the SA103F notes say that portion goes in as a disallowable expense (box 37).

Tools you also use at home

Many tradespeople own one set of tools and use them on weekend projects at home or for friends and family. HMRC expects you to apportion. If a cordless kit is used 80% for jobs and 20% privately, you claim 80% of the cost, whether that is an expense under cash basis or an AIA claim under traditional accounting. The 2026 notes make clear that you must reduce the claim by the private-use percentage.

A worked example, using round numbers:

1. You buy a combi drill and impact driver set for £400.
2. You estimate 75% of the use is on customer jobs.
3. Your allowable claim is £300. The remaining £100 is disallowable.

The key habit is to decide the percentage when you buy the tool, and write it down. Reconstructing it two years later when HMRC asks is much harder. If you use your phone to snap the receipt and add a one-line note on the split, you have the evidence in thirty seconds. Our guide to splitting personal and business expenses with snap receipts shows how to do it without a spreadsheet.

The same logic applies to vans. Fuel and running costs have their own rules, covered in our pieces on vehicle expenses for sole traders and claiming fuel costs.

Why depreciation is never an expense

A tool losing value over time is not a cost you can deduct. This confuses people because depreciation appears in some accounts. On a tax return, you either claim the purchase cost as an expense under cash basis, or you exclude it from daily expenses and claim capital allowances under traditional accounting. Do both and you have claimed the same tool twice, which is a frequent reason for HMRC to ask for documents.

The HS252 helpsheet on capital allowances explains how allowances and balancing charges work if you go down the traditional route, including what happens when you sell an item you have already claimed on.

The £1,000 trading allowance and your tool costs

The trading allowance can work against you. Under the 2026 notes, if you claim it, you cannot deduct any allowable expenses or claim capital allowances. For a tradesperson with real material and tool spend, it rarely helps. HMRC’s helpsheet HS222 says individuals with total receipts over £1,000 can choose to deduct the allowance instead of actual expenses, so it is a choice, not an obligation.

A quick test: if your genuine business expenses for the year, including tools, are more than £1,000, claiming actual costs will almost always leave you with a lower taxable profit. Run your own figures through our Self Assessment tax calculator before you decide.

What if you are an employee, not a sole trader?

Everything above applies to self-employed people. If you work for an employer under PAYE and buy your own tools, different rules apply. Employees in many trades can claim fixed annual amounts for tool upkeep, known as flat rate expenses. The Low Incomes Tax Reform Group explains that HMRC has agreed fixed amounts for the upkeep of tools for employees in a range of industries. If you are a subcontractor or run your own business, you generally claim actual costs on your Self Assessment instead.

Keeping records HMRC will accept

You do not send receipts with your return, but you must be able to produce them. The 2026 notes expect accurate records of all business transactions, so for tools that means:

• Receipt or invoice showing the date, supplier and item.
• Bank or card statement as backup.
• Business-use percentage, noted at the time of purchase.
• For repairs, a line on what failed and what was done.
• For anything you sell or scrap, the date and amount received.

How long to keep them is covered in our Self Assessment records checklist. For general routines, see the expense tracking guide for sole traders and how to track business expenses.

If you carry a lot of kit across several vans or sites, some trades use RFID tool tracking systems to log where each item is. For a sole trader, a simple list of serial numbers, purchase dates and prices does the same job for tax and for insurance claims after a theft.

A simple tool register

Keep one list, with a row per significant item:

1. Item and serial number.
2. Date bought and price paid.
3. Business-use percentage.
4. Claimed as expense or under capital allowances.
5. Repairs, with dates and costs.
6. Date and value if sold or scrapped.

Perspective: what we see on the van floor

We built TradeTally around the admin that follows a day on site, and tools are where most of it goes wrong. The expense is rarely the problem. The problem is that the receipt is in a jacket pocket, the split between work and home was never written down, and a repair and a replacement look identical on a bank statement three months later.

Our advice is to treat each tool purchase as a thirty-second job at the till. Photograph the receipt, say whether it is a repair or a new item, and note the business percentage. Do it on the day and your year-end is a review, not a reconstruction. If you do nothing else this year, do that.

We would also say this: do not chase the biggest claim, chase the one you can defend. A smaller, well-documented claim is worth more than a larger one you cannot explain.

— Simon

Keeping tool costs tidy with TradeTally

TradeTally lets you snap a receipt in the van, tag it as a tool expense and keep the paperwork ready for Self Assessment, with SA103F export when you need it. The Starter plan is £0 per month, and Professional is £12 per month or £120 per year, with full access to unlimited invoices, receipts and tax exports. You can see the details on our pricing page, or try it first on the Starter plan. If you work in construction, our builder invoicing page shows how it fits that trade.

Mistakes to avoid at year end

• Claiming the whole price of a dual-use tool. Apportion and keep the reasoning.
• Double-claiming. Do not put a tool in expenses and in capital allowances.
• Calling a replacement a repair. Where in doubt, write down why it was a repair.
• Claiming depreciation. It is never allowable.
• Using the trading allowance and expenses together. You cannot.
• Switching methods without noting why. Document your choice.

If your turnover is below £90,000, the SA103F notes say you can report total expenses in a single box (box 31) rather than itemising. That is a reporting convenience only. The records behind the total still need to be there. If your situation is complicated, for example a mix of cash basis and a large equipment purchase, ask a qualified accountant before you file.

FAQ

Can I claim tools bought before I became self-employed?

Generally the claim relates to costs of the business, so check with an accountant before including older tools. If you started using personal tools in the business, the position depends on your accounting method and the value of the item. Keep the original receipt and a note of when you began using the tool for work.

Do I need to send my receipts to HMRC?

No. You do not submit receipts with your Self Assessment return, but you must keep accurate records of business transactions so you can provide them if HMRC asks. Keep receipts, invoices and bank statements for tools and repairs.

Can I claim a tool I use for both work and home projects?

Yes, but only the business share. If a tool is used 70% for work, you claim 70% of the cost. Decide the percentage when you buy it and write it down.

Is replacing a broken drill a repair?

If you replace a worn part, such as a battery or chuck, it is normally a repair and allowable. Replacing the whole drill is capital expenditure, which is claimed as an expense under cash basis or through capital allowances under traditional accounting.

Sources

• SA103F Self-employment (full) notes 2026
• BIM35430: repair or capital expenditure
• Business records if you’re self-employed
• Expenses if you’re self-employed: office, property and equipment
• HS252 Capital allowances and balancing charges 2026
• HS222 How to calculate your taxable profits 2026
• LITRG: Employment expenses
• RFID tool tracking

Recommended

• Expense Tracking Guide UK for Sole Traders
• What Expenses Can an Electrician Claim?
• Tradespeople, stop overpaying on vehicle expenses as a sole trader
• What Expenses Can a Plumber Claim?