Many tradespeople can claim tax relief for the cost of tools bought for work. Many don’t know that Capital Allowances claims are not bound by any time limits. This means that you could potentially claim tax relief for tools you bought years ago.
As long as the tool is still being used and you have proof of purchase, you can make a claim.
What do I need to make a claim?
If you are reimbursed for a tools purchase by your employer, then it becomes ineligible for tax relief. You must also have the necessary evidence to support a Capital Allowance claim. This means a proof of purchase that displays the ‘what’, ‘when’ and ‘how much’ for each tool. HMRC accept dealer activity reports and credit agreements, as well as ordinary receipts.
In a situation where you no longer have any of the necessary paperwork, you can reclaim a, usually smaller, ‘flat rate’ tool allowance. The flat rate for tools and protective clothing in your trade is currently £120 per year. You claim tax relief on this amount and can only be backdated for four years.
After making your first flat rate claim, you are saved from making the same claim every year because it is taken into account in your tax code. This reduces your monthly tax bill for the duration of your career.
