There are some jobs that cannot be done without the ownership of the proper tools. Electricians, mechanics, plumbers and joiners all need specialist equipment to carry out their work. HMRC offers a tool tax rebate to eligible employees.
HMRC recognises that many individuals fit the criteria for this rebate. If you haven’t applied or didn’t know you could, then our guide is here to help.
We’ll outline how you can claim from HMRC directly for work expenses generated as an employee.
What is a Tool Tax Rebate?
A tool tax rebate can be claimed by employees who buy their own tools to use for work. It is often referred to as a mechanics’ tool rebate but it applies to other industries too.
As well as tools, you can also claim tax for uniform laundering and repairs. It is essential to note that you cannot apply for a tax rebate on the initial cost of any tools or clothing you purchase. Rather, the rebate is for having to replace or repair any tools or clothing.
As per the government website, you cannot claim tax relief on any PPE you need for your job. This should either be reimbursed by your employer once you have bought it, or provided to you directly by your boss.
Information relating to claiming tool tax rebates often refers to mechanics and construction workers. However, there are other industries eligible to claim a rebate on their tools. It isn’t just limited to tools either.
A claim can also be made for the following expenses:-
- The upkeep and replacement of uniforms and footwear.
- Working from home.
- Vehicles and mileage used for work.
- Professional fees and subscriptions.
- Travel and overnight expenses.
- Purchasing additional equipment.
There are over 80 industries listed on the HMRC website that are eligible for claiming a tool tax rebate. If you need tools to do your job and are employed, you can likely claim.
What Tools Can I Get a Tax Rebate On?
The tools you can get a tax rebate on will very much depend on the type of industry you work in. We provide a few examples below but as long as you are employed in a job and use tools you purchase, you should be eligible.
Some examples of industries and eligible tools are:-
- Builders can claim for hard hats, hi viz jackets and power tools.
- Mechanics are eligible for rebates on the upkeep of overalls and tools such as wrenches, pliers and pry bars.
- Hairdressers can get tax relief for their own scissors and other hair tools.
- Electricians will be eligible for work trousers upkeep and tools such as drills and screwdrivers.
- Forestry workers can get rebates for tools required for their jobs such as ropes and climbing aids.
If your employer has reimbursed you for tools or paid for them themselves, then you cannot claim.
Unfortunately, the claim cannot usually be made for the initial purchase of tools and uniforms. However, it can cover the replacement or upkeep of them.
How to Claim the Tool Tax Rebate
You can find out if you are eligible for a rebate by answering some questions on the HMRC website first, to establish you fit the necessary criteria.
You need to have paid tax to be eligible, along with some other criteria such as:-
- Been in employment for the period you are claiming for.
- You use the tools purely for work.
- You buy your tools.
- If you have been partly reimbursed, you can claim the difference.
The tool tax rebate can be applied for by using the P87 tax form if you are in employment. This form allows you to claim back on certain expenses accrued through your job. This form is available to fill in via the HMRC website or you can download a hard copy.
You can apply online, via the post or, in some circumstances, via the telephone. The faster way is online and you are talked through every step of the process.
All you need to do to get started with an online application is to create or log into your gateway account and then you can begin the process of applying for the rebate.
Can Claims be Backdated?
It is possible to backdate your tool tax rebate claim. You can backdate your claim for up to a maximum of 4 years.
You must still be using the tools though and in some cases, will need to show proof of purchase. After the 4 years have passed, the opportunity make a claim will be lost, meaning you will not be eligible to claim.
How Much Tax Rebate Can be Claimed on Work Tools?
Claiming a tax rebate for tools comes under the same umbrella as uniforms and work clothing.
There are two ways in which you can claim. You can either claim for the actual amount you have spent or opt for the flat rate amount. The amount you can claim using the flat rate will be dependent on the industry you work within.
To find out how much you can claim using the flat rate, you can refer to the industry list which is on the HMRC website. This is often a smoother and simpler process because you do not need to hang onto the receipts.
If your job is not individually listed, you can still claim a flat rate expense of £60 per year.
How is the Rebate Paid?
Once you have made your claim, HMRC will begin processing your rebate. This can take between 8 and 12 weeks from when you send in your application, to receiving the money.
It does depend on how busy the tax office is at the time of your claim and how complex your claim is. In most cases, the money will be paid directly to your bank account.
Receipts & Record Keeping
You might need to retain copies of your tool purchase receipts when claiming a tax rebate. This is the case if you plan on claiming the exact amount you have spent as opposed to the flat rate option.
Opting for claiming for what you have spent means keeping any proof of purchases, for up to 4 years if you are backdating your claim.
If you do not have the receipts or do not wish to use this option, you can choose the flat rate process instead.
This is based on an average spent on each industry which has been calculated by HMRC. This is often the preferred method for employees.
Claiming a Tax Rebate After Employment Has Ended
If you have recently lost your job and wish to claim employment related expenses, you are still eligible for a rebate. For you to fit these criteria, you need to have been paying taxes through the PAYE system.
If you lost your job part way through the tax year, you might be able to claim a tax rebate. You can use the HMRC tools to establish if you are owed anything.
Should you start with another employer, then the refund will come through the PAYE system in your new job.
Can I Claim a Tool Tax Rebate if I’m Self Employed?
It’s not possible to claim a tool tax rebate if you are self employed. Instead, the self assessment process should be used to declare your earnings and expenses.
You need a government gateway account and then you have access to your annual returns. You can list your expenses on the return either as a lump sum or individually. This is automatically taken off your income.
Copies of receipts should be kept in case you become subject to a tax audit.
Apprentices can claim tax rebates on any tools they are required to purchase as long as they are on the PAYE system.
If you are employed and buy your own tools to work with, you cannot claim the VAT back on purchases made. The business needs to be VAT registered to claim back on the VAT.