If your job requires you to have certain tools to fulfill your role, like a pair of sewing scissors for example or a more traditional tool like an electric drill, you can in many cases claim tax back on them.
Many people don’t know this and they could end up receiving significant amount of tax back. So how do you go about claiming tax back on your tools? The first thing you need to know is how much you want to claim back for, as there are two different categories your claim could fall into.
Tax claims for expenses (such as tools) are measured in two different brackets, claims up to £2500 per tax year and those over £2500 per tax year. Remember there is no upper limit on the value of what can be claimed meaning even expensive items like a tool box can be eligible.
Making a tool claim
No matter what bracket your claim falls into, claiming tax back works in much the same way. For claims up to £2500 you can claim online, by phone or by using a self assessment tax return. For claims over £2500, you can only use a self assessment tax return.
The big question many people want to know when it comes to claiming tax back on tools is “do I need the receipts”. The answer is you don’t, but without them, you could end up with a much smaller tax refund.
If you have the receipts you can make a direct claim for what you’ve spent, if the tools you’re claiming for are acceptable. If you don’t have the receipts you can make a claim for a flat rate deduction instead.
These are set by HM Revenue and Customs each year and they take guidance from employees in different occupations to make sure the amount they set is fair. If you work in a field that isn’t listed by HM Revenue and Customs, you can still claim for the annual amount of £60.
Claiming for substantial equipment
You might be wondering what happens if you have more costly tools that you need to do your job? Since the earlier claims, we talked about only covered the costs involved with replacing or repairing smaller tools. While you can claim tax back on larger tools or equipment, this falls under claims for capital allowances instead.
So, you can claim tax relief on the full costs of tools that are covered by annual investment allowance. This means tools that are considered plant or machinery, basically meaning expensive tools you keep to do your job.
A claim for capital allowances needs to be processed under strict criteria and can be submitted either via correspondence or on a tax return depending on the value of the claim.
It’s nothing to do with VAT
The tax relief you may be able to reclaim has nothing to do with claiming the VAT back on the purchase. You need to be VAT registered to be eligible to reclaim the VAT paid. If you are employed and buy tools for work you are entitled to claim back a tax rebate on the tax you have paid through PAYE.
