Can I claim tools and equipment?
Yes. Under the cash basis a tool, a machine or a computer is an expense in the year you pay for it, whatever it cost, with a short list of exceptions. Here is how that works, what happens with private use, with kit you owned before you started, and when you sell it.
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What counts, and when
Tools and machines
Power tools, hand tools, a mixer, a mower, a saw bench or a ladder. Gov.uk lists machinery among the things a cash basis business claims as a normal allowable expense when it pays for them, rather than through capital allowances, whatever a single item cost.
Computers, phones and software
A laptop, a tablet or a printer is equipment: an allowable expense under the cash basis, capital allowances under traditional accounting. Software your business uses for less than two years, or pays a regular licence for, is an office cost under either method.
Repairs and consumables
Blades, bits, abrasives and other things used up on the job, and repairs that keep a tool doing what it did, are running costs under both methods. Gov.uk puts repairs and maintenance of equipment among allowable expenses.
What is never allowed
Depreciation of equipment, which gov.uk lists among the costs you cannot claim: the cash basis expenses the cost itself, and traditional accounting uses capital allowances instead. Anything bought for private use, and the private share of anything used for both.
The rules behind every claim: allowable expenses for sole traders.
The cash basis exceptions
The cash basis has been the default for sole traders since 6 April 2024, and under it HMRC's manual treats capital spending as an allowable expense with a short list of exceptions. The ones that matter to most traders are a car, which is claimed through capital allowances or inside the flat mileage rate instead, and land and buildings.
The rest of the list: buying a business or part of one; education or training; an asset that is not a depreciating asset, meaning its useful life will not end or its value fall by 90% or more within 20 years; an asset not acquired for continuing use in the trade; intangible assets that do not qualify; and financial assets. A van, a digger, a laptop and a drill are all depreciating assets kept for use in the trade, so they all pass.
Under traditional accounting the same kit goes through capital allowances. The annual investment allowance gives the full cost of most plant and machinery, up to £1 million a year, in the year you buy it, so the result is often the same; the difference is the paperwork, and the exceptions, which under capital allowances include items you owned for another reason before you started using them in the business.
Private use, kit you already owned, finance and selling
Used for the business and at home
Gov.uk's rule is that you claim only the business part. A laptop used half the time for the business is a 50% claim under either method: gov.uk's own capital allowances example is a £600 laptop used outside the business half the time, where the allowance is reduced by 50%.
Bought before you started trading
Something you bought for the business in the seven years before you started can be claimed as if paid on your first day, provided it would have been allowable had you been trading; HMRC's manual sets out the seven-year rule. For capital allowances, gov.uk values an item you owned for another reason at its market value when you start using it in the business, and the annual investment allowance is not available on it.
Hire purchase and loans
Hire purchase interest is allowable in full on the business share, and for capital allowances you claim on all the payments from the day you start using the item, interest aside. Interest on a cash loan is different under the cash basis: HMRC's manual caps interest and the costs of arranging finance at £500 a year in total.
When you sell it
Under the cash basis the money you get for a tool you have claimed is a receipt of the trade, reduced in proportion to any private share, and no capital gains tax arises. If your private use of something goes up materially, HMRC's manual treats the change itself as a receipt at a share of market value. Under capital allowances the sale value comes off the pool, and can produce a balancing charge.
See what the claim saves you: the sole trader tax calculator.
Recording it in FileThat
HMRC's helpsheet on working out taxable profits puts the cost of tools and equipment bought under the cash basis in the repairs and maintenance box, and a computer or other office equipment in the office costs box. So record a tool or machine as Repairs and maintenance, and a laptop, tablet or printer as Phone, fax, stationery and other office costs, each with a business-use percentage if you also use it privately, and only the business share is filed. Blades, bits and other consumables go in Other expenses. When you sell something you claimed, record what you get as Other business income not included in turnover, so it counts as income without inflating your sales.
Straight answers
Can I claim the full cost of a tool in the year I buy it?
Under the cash basis, yes. Gov.uk says that unlike traditional accounting you claim the cost of equipment you buy to keep and use in your business as a normal allowable expense, and it gives machinery, computers and vans as examples. The exceptions are cars, land and buildings, and a few other items HMRC's manual lists.
Can I claim a laptop or a phone I also use at home?
The business share of it. Gov.uk's rule for anything used for both business and private purposes is that only the business part is claimed, and its capital allowances example is a £600 laptop used outside the business half the time, where the claim is reduced by 50%. Work out a fair share and be ready to explain it.
Can I claim tools I bought before I started trading?
Usually. Something bought for the business in the seven years before you start, which would have been allowable had you been trading, is treated as paid on your first day, so it goes in your first period. For capital allowances, gov.uk values an item you owned for another reason at its market value when you start using it, and it does not qualify for the annual investment allowance.
What happens when I sell a tool I claimed?
Under the cash basis the money is a receipt of your trade in the year you get it, reduced in proportion to any private share you never claimed, and HMRC's manual says no capital gains tax arises on something relieved under the cash basis. Under capital allowances the sale value comes off the pool, and if it is more than the pool holds the difference is a balancing charge.
Can I claim depreciation on my equipment?
No. Gov.uk lists depreciation of equipment among the costs you cannot claim. The cash basis gives you the whole cost as an expense when you pay it, and traditional accounting gives you capital allowances, which are HMRC's version of depreciation. Either way the tool is relieved once, in full, not through a yearly depreciation charge.
Is software a tool I can claim?
Yes. Gov.uk puts software your business uses for less than two years, or pays a regular licence fee to renew, among office costs, so a monthly subscription is an expense as you pay it. Software bought outright to keep for longer is equipment: an allowable expense under the cash basis, and capital allowances under traditional accounting.
Do I have to use Making Tax Digital for Income Tax?
If your qualifying income is over the threshold, yes. It has been £50,000 since 6 April 2026, and falls to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is your turnover before expenses, from self-employment and property together, as shown on your tax return.
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