Can sole traders claim equipment and tools as business expenses?

If you’re self-employed and spend money on tools, tech or equipment for your work, there’s a good chance you can claim some or all of the cost as a business expense.

But the rules aren’t always straightforward.

This is especially true when something is used for both business and personal purposes.

In this guide, we explain the basics of claiming equipment costs as a sole trader, from laptops and mobile phones to power tools and office chairs. We’ll cover when you can deduct the full cost, when you’ll need to apportion it, and how capital allowances may apply.

What counts as equipment?

“Equipment” can mean different things depending on the type of business you run. If you’re a photographer, it might include lenses, tripods and editing software. If you’re a builder, it could be drills, saws and safety gear. For a freelancer, it might simply be a laptop and a desk.

The key question for tax purposes is whether the item is used for your business or for personal reasons.

Common examples include:

• Laptops, desktop computers and tablets
• Software subscriptions and business apps
• Mobile phones (and sometimes the contract)
• Office furniture and desks
• Tools and machinery
• Card readers and POS terminals
• Cameras, microphones and lighting equipment

If you buy something solely for business use, you can usually claim the full cost. If it’s used partly for personal reasons, you’ll need to make a fair estimate and only claim the business-use proportion.

Revenue vs capital – what’s the difference?

Not all business purchases are treated in the same way for tax purposes.

Some are classed as day-to-day revenue expenses, which are generally deducted in the year you incur them.

Others are considered capital assets because they provide value over a longer period.

As a general guide:

• Software subscriptions, repairs and consumables are usually revenue expenses.
• Laptops, tools, furniture and machinery are often capital items.

If you’re unsure, an accountant can help. Otherwise, you’ll need to make sure the purchase is recorded correctly on your tax return.

Equipment claims at a glance

Capital allowances: how they work

Many sole traders using traditional accounting claim qualifying equipment through the Annual Investment Allowance (AIA). This allows you to deduct the full cost of qualifying plant and machinery from your profits in the year you buy it, up to the current AIA limit.

If you spend £1,200 on a laptop that’s used entirely for your business, you can often deduct the full amount rather than spreading the cost over several years.

If you use the cash basis, different rules apply. Most equipment purchases are generally deducted through the cash basis instead of capital allowances, although separate rules continue to apply for some assets, including cars.

Keep receipts and record when you bought the item, together with any business-use calculation if it’s used for both business and personal purposes.

HMRC’s guidance on capital allowances is available here:

https://www.gov.uk/capital-allowances

Read more about capital allowances here.

What if I use it personally as well?

This is very common, particularly with laptops, mobile phones and home office equipment.

If an item has both business and personal use, you can only claim the business proportion.

For example, if you buy a £600 laptop and estimate that you use it 70% for business and 30% personally, you would normally claim £420.

You don’t need an exact log of every hour of use, but you should make a reasonable estimate and keep a note explaining how you arrived at it.

The same principle applies to mobile phone bills if the phone is used for both business and personal calls.

Read more about claiming home office expenses.

Can I claim for equipment I already owned?

Yes, sometimes.

If you already owned equipment before becoming self-employed and then started using it for your business, you may be able to claim based on its market value when it was introduced into the business.

For example, if a laptop was worth £400 when you started trading and you use it 50% for business, you may be able to claim £200.

Keep a note explaining how you estimated the value in case HMRC ever asks.

What about software and subscriptions?

Business software such as Canva, Microsoft 365, Adobe Creative Cloud or online storage is usually treated as a revenue expense.

If it’s used wholly for business, you can normally deduct the full subscription cost. If it’s also used personally, only claim the business-use proportion.

Some one-off software purchases may instead be treated as capital expenditure.

Read our guide to software subscriptions and allowable expenses.

You can also claim for accounting software – compare your options here.

Further HMRC guidance:

Self-employed allowable expenses

Do I need to keep receipts?

Yes. Keep receipts and other supporting records for everything you claim, including items that are only partly used for business.

HMRC can ask to see evidence several years after you’ve submitted your tax return, and digital copies are perfectly acceptable.

If you’ve lost a receipt, other evidence such as a bank statement may help, but keeping the original receipt is always preferable.

Read more about tax record keeping.

Can I use simplified expenses instead?

Simplified expenses are designed for certain costs, such as working from home or using your own vehicle.

They don’t normally apply to equipment purchases, which are claimed separately under the relevant tax rules.

If you run a small business from home, however, simplified expenses may still reduce the amount of record keeping required for other costs.

See our full guide to allowable business expenses.

Final tip: don’t over-claim

Only claim costs that genuinely relate to your business, and make fair, reasonable estimates where equipment has mixed business and personal use.

If you’re planning a significant purchase or you’re unsure how something should be treated, professional advice can often save time and prevent mistakes.

Not sure if you need an accountant? Here’s how to decide.