What Can a Tradesperson Actually Claim as an Expense?

Every pound of genuine business cost you do not claim is a pound you pay tax on twice: once by spending it, once by handing HMRC the tax on it. Most tradespeople know about the van and the tools. The money is usually lost in the small, boring things nobody writes down.

The test is not whether it felt like work. It is whether the cost was wholly and exclusively for the business.

That phrase is HMRC's, and it decides almost everything below. A cost that is entirely for the business goes in. A cost that is entirely personal stays out. A cost that is both is split, and you keep the workings.

The ones nobody argues about

These are allowable for a sole trader, and they are where most of your spending already is:

• Materials. Everything you buy in to do the work, whether you bill it on or not.
• Subcontractors. What you pay another trade, including labour you take on for one job.
• Tools and equipment. See the section below, because how you claim depends on the price.
• Business insurance. Public liability, employers' liability, tools cover, van insurance.
• Trade subscriptions and software. Scheme memberships, certification bodies, the apps you run the business on.
• Advertising. Van signage, a website, printed cards, local ads.
• Accountancy and bank charges on the business account.
• Protective clothing. Boots, hi-vis, hard hats, gloves, and branded workwear.

The van and the miles

There are two ways to claim vehicle costs, and you have to pick one per vehicle and stay with it while you own it.

Mileage, the simple way

HMRC's flat rate is 45p a mile for the first 10,000 business miles in the tax year, then 25p. That figure is meant to cover everything: fuel, servicing, insurance, tax, repairs, and the wear that ends in a new van.

Claim mileage and you cannot also claim the fuel or the servicing. It is one or the other.

Actual costs, the detailed way

You add up what the van really costs you in the year, claim the business share, and claim the van itself through capital allowances. For a van used only for work, that share is usually all of it.

This nearly always wins for a working van doing high miles or carrying an expensive purchase. Mileage nearly always wins for a car with modest business use and no paperwork habit.

Whichever you choose, the journeys have to be recorded as you go. A guess in January for the previous April is not a record.

The journey that does not count

Travel between home and a permanent place of work is commuting, and commuting is not an expense. For most tradespeople every job is a different site, so the travel is business travel. If you work out of one yard or unit every day, the run to it is your commute.

Tools: the price changes the rule

Small tools and consumables are an everyday running cost, and go straight in the accounts.

Something substantial — a van, a mini digger, a machine that will still be earning in five years — is capital. You claim it through the Annual Investment Allowance, which for most trade businesses means the whole cost comes off the year's profit anyway. The difference is which box it goes in, not whether you get relief.

Buy on finance and you claim the asset, not the monthly payment. The interest is a separate expense. Get this the wrong way round and you claim the same van twice, which is the sort of thing that gets a return looked at.

Working from home

Quoting at the kitchen table on a Sunday is business use of your home, and it is claimable. Two ways again:

• The simplified flat rate, based on how many hours a month you work at home. It is small, it needs no evidence beyond the hours, and it is what most sole traders use.
• A share of the real bills — rent or mortgage interest, council tax, heating, light, broadband — split by rooms and time. More work, and worth it only if you genuinely use a room for the business.

The four that get claimed wrongly

1. Ordinary clothes

Protective clothing and branded workwear are allowable. Jeans, a plain fleece and boots you also wear to the pub are not, however grubby they get on site. The rule is about the clothing, not the state of it.

2. Lunch

You have to eat whether or not you are working, so the everyday sandwich is not an expense. A meal is claimable when you are away from your usual pattern of work: an overnight stay, or a job somewhere you do not normally go. Keep the receipt and note the job.

3. Training

Keeping your existing skills current is allowable: a ticket renewal, a regulations update, the course that keeps you registered. Training that gives you a new trade you did not have before is treated as capital and is not. A gas engineer's ACS renewal, yes. A plumber's first electrical qualification, no.

4. The phone

One phone doing both jobs is split. A sensible, consistent business share is fine. Claiming the whole bill on a personal contract your family also uses is not.

If you are under CIS

If you work for contractors in construction, they deduct tax from your labour before they pay you — 20% if you are registered with HMRC, 30% if you are not. Materials you supply are not deducted from.

That money is not lost. It is tax already paid, and it comes off your bill at the end of the year, often as a refund. Two things follow. Register, because the difference between 20% and 30% is your money sitting with HMRC for a year. And keep every CIS statement, because that is your proof you already paid it.

What HMRC actually wants to see

Not a shoebox in March. The requirement is a record of each transaction, kept as you go, with something behind it: a receipt, an invoice, a bank line.

Under Making Tax Digital those records have to be digital, and the quarterly updates come out of them. If you are over the turnover threshold, the shoebox stopped being an option — see our guide to MTD for the dates that apply to you.

Photograph the receipt at the merchant's counter. It takes four seconds, and it is the whole habit.

The one that pays for itself

Put every expense against the job it belongs to, not just into the year's pile. Then the expense does two jobs at once: it lowers your tax bill, and it tells you what that bathroom really cost you. Most tradespeople claim expenses for the first reason and never get the second.

How Nule helps

Nule keeps the record in the form HMRC asks for, and the form you can actually use.

• Log an expense on site, against the job, with a photo of the receipt.
• Mileage recorded per journey, so the figure at year end is a record and not a guess.
• Every cost categorised as it goes in, so the quarterly update is already written.
• Tax set aside as you earn, so the bill is not a surprise.

Before you file

This is general information about how the rules work, not advice about your business. Rates and thresholds change at each Budget, so check the current figures on gov.uk, and talk to an accountant about anything unusual. What matters most is not knowing every rule. It is having the records to hand when someone asks.