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Tax rebate for tools in 2024: The only breakdown you need for everything from hammers to hedge trimmers

If you’re employed by a company and work PAYE (Pay As You Earn), you may have never thought about tax as something you have to sort out, let alone a specific tax rebate for tools.

But if you use tools for your job and you’re contributing towards their expenses you could be paying more tax than you have to.

 We’re here to give you the lowdown on your tool tax rebate, the different ways you can claim tax back on tools and just how much you could be saving.

What is tool tax relief?

In certain professions tools are not something you can do your job without. Maybe you’re a mechanic who has to bring their tools to work or a chef with a set of specialist knives.

As such, HMRC has kindly decided you can claim a portion of the cost of your tools by getting back some of the money you’ve paid in tax.

Also known as tool tax relief. 

You’d do this as part of your yearly expenses if you’re self-employed. But don’t panic; if you’re PAYE and work for an employer, but you’re the one footing the bills for these pricey tools, you can also get some tax back.

Can you claim VAT back on tools?

It’s a bit of a misconception that you can claim VAT back on tools. Only VAT-registered businesses or VAT-registered sole traders can claim back VAT, not someone who works PAYE.

If you are a sole trader who’s VAT-registered you can technically claim back VAT on all services and goods you buy for your business (which would include tools). But becoming VAT registered takes a lot of paperwork, increases your prices and is only necessary for individuals earning £85,000 and over in the UK. 

What are the criteria to qualify for tax back on tools? 

There are a few criteria you need to meet to qualify for a tool tax rebate: 

  1. The tools or equipment must have been necessary to complete your work
  2. You have to have bought these tools with your own money
  3. Your employer cannot have paid for all of it (though they can have paid for some of it)
  4. If you are going to use the exact spend method (we’ll delve into this in more detail in a sec) then you must have receipts and paperwork to prove your purchases.

But wait, I hear you cry, how do I know if my profession is eligible?

Which professions and what tools can you claim tax back on?

The good news is any job could qualify for the tool tax rebate, so long as the work requires you to buy and maintain tools.

 It’s worth noting that you can claim for repairing tools as well as buying new ones. 

Some of the most popular trades that are likely to claim tax back on their tools include:

  • Electricians, for everything from wire strippers to pliers
  • Joiners and carpenters, think chisels to mallets
  • Chefs, decent chef's knives can cost a small fortune and are rarely provided by the restaurant
  • Hairdressers, for scissors, combs, and other hair equipment
  • Mechanics, for personal wrenches or hammers that don’t belong to the garage

Remember you can only claim on tools that you’ve bought for yourself, not tools that your employer has bought for you or reimbursed you for.

There are actually a fair few types of tax relief mechanics are entitled to. From uniform to mileage to subscription fees, check out our article on tax rebates for mechanics to find out more.

How can you claim this tax rebate for tools?

As the old adage goes you can do things quickly or you can do things well.

When it comes to tax rebates for tools you can use a flat rate (quickly) or use your exact spend and make a capital allowance claim (where you’re likely to get more money back).

Let's break it down a bit more. 

Using a flat rate for your tax rebate for tools

A flat rate is a specific yearly allowance of tax relief the government assigns to different professions.

For example, joiners and carpenters are offered £140 a year whilst Shipyard Labourers come in at £80 a year. You can read the whole list of flat rates for uniforms, work clothing and tools for various occupations on  HMRC’s website.

If your industry or occupation isn’t on the list the default flat rate amount of tool tax you can claim is £60. Remember if your employer has put any money towards your tools or uniform for this tax year you must deduct that from the flat rate.

(Yes, you can also be getting tax relief on HMRC uniform tax!

It’s quick and easy to check if you can check how much you can claim using the flat rate online. You can also make a claim by post or phone by filling out a P87 form.

Using exact spend and a capital allowances claim for your tool tax rebate 

Exact spend is when you keep track of every eligible tool or piece of equipment you purchase, so you’re able to claim back a percentage as a tool tax rebate.

You must have a receipt for every purchase and make a capital allowances claim to use this method. Tools qualify as ‘plant and machinery’ under a capital allowances claim where you can claim 18% of the cost of the tools

What’s the easiest way to get tax back on tools?

As you can probably tell: It's far easier to use the flat rate to claim tax back on your tools.

You don’t need to keep any records or receipts. But you’re likely to get a lot less than what you paid for or what you could make through a capital allowance claim.

So if you’ve spent quite a lot on tools in the last year it may be worth spending some time figuring out how to make the most of your claim.

Whereas if you know you haven’t spent very much and have better things to do, it may be easier to use the flat rate. 

Can you backdate claims for tax back on tools?

With both the flat rate and capital allowance method of claiming you can backdate your tool tax rebate for up to four years. With both methods, you must still be using the tools, and if you are using the capital allowance method then you must still have the receipts.

If you have receipts that stretch back further than four years, you still may be able to claim something but it’s unlikely to be 100% of the cost you paid originally. (Though it's likely to still be a healthy amount!)

Do tools bought on credit qualify for tax back on tools? 

Tools bought through a credit system, like Snap-on tools, do indeed qualify for tax relief. In fact, you can even claim the interest accrued as a necessary business expense in your tax rebate for tools.

How long does a claim take?

On average a tool tax rebate will take between 12 and 24 weeks to process from when you applied, so long as HMRC are not delayed. If you apply around the self-assessment deadline of the 31st of January or the end of the tax year at the beginning of April it’s likely to take longer. 

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