HMRC Allowable Expenses for Tradespeople: Complete List

Allowable expenses are costs that you incur wholly and exclusively for the purposes of your trade. When you deduct these from your income on your Self Assessment return, they reduce your taxable profit and therefore the amount of income tax and National Insurance you pay. Understanding what you can claim is one of the most effective ways to legally reduce your tax bill.\n\nThe golden rule is that the expense must be incurred wholly and exclusively for business purposes. This does not mean the item can never be used personally, but where there is mixed personal and business use, you can only claim the business proportion. For example, if you use your mobile phone 70 percent for business and 30 percent for personal calls, you can claim 70 percent of the cost.\n\nHMRC distinguishes between revenue expenses and capital expenses. Revenue expenses are day-to-day running costs like materials, fuel, insurance, and phone bills. These are deducted in full in the year they are incurred. Capital expenses are purchases of assets that have a lasting value, such as vehicles, expensive tools, or machinery. These are handled through capital allowances, which let you deduct the cost over time or claim the full amount through the Annual Investment Allowance.\n\nMany tradespeople underestimate their allowable expenses and end up paying more tax than necessary. A common example is failing to claim mileage or vehicle costs for travelling between job sites, not claiming the business use of a home office, or forgetting to deduct professional subscriptions and training costs. Tracking every legitimate expense throughout the year with TradeTally ensures nothing is missed at tax time.

The cost of materials used on jobs is your most significant expense category. This includes everything from copper pipe, solder, and fittings for a plumber, to cables, switches, and consumer units for an electrician, to timber, plaster, and fixings for a builder. The full cost of materials purchased for specific customer jobs is deductible in the year of purchase.\n\nSmall tools and consumables such as drill bits, saw blades, screwdrivers, PPE, and testing equipment that need regular replacement are treated as revenue expenses. You deduct the full cost in the year of purchase. There is no strict price threshold that separates a small tool from a capital asset, but generally items under a few hundred pounds that have a short useful life are treated as revenue expenses.\n\nLarger tools and equipment, such as power tools, diagnostic equipment, scaffolding, and specialist machinery, are capital assets. You can claim their cost through the Annual Investment Allowance, which allows 100 percent deduction in the year of purchase up to one million pounds. This means even a significant purchase like a full set of scaffolding or a professional-grade testing rig can be deducted immediately.\n\nWorkwear that is protective or has your business branding is deductible. This includes steel-capped boots, high-visibility clothing, hard hats, overalls, and branded polo shirts or fleeces. Ordinary clothing that you happen to wear for work, such as jeans and trainers, is not allowable even if you only wear them on site. The test is whether the clothing is specifically required for your trade or serves as advertising for your business.

For most tradespeople, vehicle costs are the second-largest expense category after materials. You have two options for claiming vehicle costs: actual costs or the simplified mileage rate. With actual costs, you claim the business proportion of fuel, insurance, road tax, servicing, repairs, MOT, and finance payments or lease costs. With the simplified mileage rate, you claim 45p per mile for the first 10,000 business miles and 25p per mile thereafter.\n\nOnce you choose a method for a particular vehicle, you must stick with it for the life of that vehicle in your business. If you claim actual costs, you can also claim capital allowances on the purchase price. If you use the mileage rate, it is designed to cover all vehicle costs including depreciation, so you cannot claim capital allowances on top.\n\nBusiness mileage includes travel between job sites, trips to suppliers, travel to meet clients for quotes, and journeys to the bank or accountant. It does not include your commute from home to a regular place of work. However, if you have no regular place of work and travel directly from home to different customer sites each day, these journeys count as business mileage. Most sole trader tradespeople fall into this category.\n\nOther travel costs are also deductible. If you need to pay for parking at a job site, that is a business expense. Congestion charges and toll roads incurred on business journeys are deductible. If you occasionally use public transport for business travel, train tickets, bus fares, and even taxi fares are allowable. Keep all receipts and note the business purpose of each journey.

If you use part of your home for business, such as a spare room for admin, quoting, and invoicing, you can claim a proportion of your household costs. The two methods available are actual costs apportioned by use, or the simplified flat rate. With actual costs, you calculate the proportion of rooms used for business and the proportion of time they are used, then apply this to your rent or mortgage interest, council tax, electricity, gas, water, and broadband.\n\nThe simplified flat rate is often easier and requires less evidence. For the 2025/26 tax year, you claim 10 pounds per month if you work from home 25 to 50 hours per month, 18 pounds per month for 51 to 100 hours, and 26 pounds per month for 101 hours or more. These amounts are modest but require no receipts or calculations.\n\nIf you rent a workshop, yard, or storage unit for your business, the rent, business rates, utility costs, insurance, and maintenance are fully deductible as business expenses. Many tradespeople rent lock-up garages for tool and material storage, and this cost is entirely allowable. Ensure you have a proper lease or rental agreement to support the claim.\n\nRepairs and maintenance to business premises are revenue expenses deductible in the year incurred. However, improvements that enhance the property beyond its original condition are capital expenditure and must be handled through capital allowances. Replacing a broken window is a repair. Installing a new window where there was not one before is an improvement. The distinction matters for tax purposes.

Accountancy fees for preparing your tax return are allowable, as are fees for bookkeeping services, tax advice, and any legal costs related to your business such as debt recovery or contract disputes. The cost of TradeTally or any business software is a deductible expense, as is your business broadband, website hosting, and domain name registration.\n\nBusiness insurance premiums are fully deductible. This includes public liability insurance, professional indemnity insurance, employer's liability insurance if you have staff, tool and equipment insurance, and commercial vehicle insurance. Personal insurance such as life insurance or private medical insurance is not allowable unless it is a specific business requirement.\n\nProfessional subscriptions and memberships are deductible if they relate to your trade. This includes Gas Safe registration for gas engineers, NICEIC or NAPIT membership for electricians, membership of trade bodies such as the Federation of Master Builders, and subscriptions to trade publications. Annual renewal of certifications and licences required for your trade are also allowable.\n\nTraining costs are deductible if they update or maintain existing skills relevant to your trade. A plumber attending a course on the latest boiler regulations can claim the cost. An electrician renewing their 18th Edition qualification can claim the course fee. However, training that equips you with entirely new skills, such as a builder training as an electrician, may not be allowable as it could be considered capital expenditure on a new qualification rather than maintaining existing skills. The distinction is often a grey area, so keep detailed records of what each course covers.

Understanding what you cannot claim is as important as knowing what you can. Personal expenses are never deductible, even if they indirectly support your business. Your daily lunch is not a business expense unless you are travelling away from your normal work area and the meal is a genuine additional cost of that travel. Regular meals at your usual workplace or from a van on-site are personal expenses.\n\nClothing that is not specifically protective or branded is not allowable. You cannot claim for jeans, trainers, or ordinary jumpers even if you wear them exclusively for work. The logic is that these items serve the basic human need for clothing and are not exclusively for business purposes.\n\nFines and penalties are not deductible. This includes parking fines, speeding tickets, HMRC penalties for late filing, and any other regulatory penalties. Similarly, you cannot deduct the cost of legal proceedings arising from negligence or illegal activities, even if they relate to your business.\n\nEntertainment costs are generally not allowable. Taking a client out for a meal or buying drinks for a contractor you work with cannot be deducted from your taxable profits. The only exception is entertaining employees at an annual event such as a Christmas party, up to a limit of 150 pounds per head per year. Gifts to customers are not deductible unless they are branded advertising items costing less than 50 pounds each that do not include food, drink, tobacco, or vouchers.