A tool tax rebate is tax relief HMRC grants to employees who buy tools for their job without an employer reimbursing the cost. It applies to tradespeople such as mechanics, electricians, plumbers, and construction workers who must supply their own equipment. The rebate reduces the tax paid on income by the value of the relief claimed, either through a refund or an adjustment to the tax code.
This guide explains who qualifies, what counts as an allowable cost, and the two main routes for claiming.
Who Can Claim a Tool Tax Rebate?
Claiming this relief depends on employment status and how tools get funded.
- PAYE employees who buy their own tools for work qualify, provided the employer does not reimburse the cost.
- Self-employed tradespeople claim tool costs differently, as a business expense on the SA103 self-employment pages of their Self Assessment return, rather than through this rebate route.
- Apprentices and trainees in a trade qualify in the same way as fully qualified tradespeople, as long as they personally funded the tools.
An employee who receives a tool allowance from their employer generally cannot claim on top of that allowance for the same items, since the cost has already been covered.
What Tools and Costs Qualify?
HMRC allows relief on tools and equipment bought wholly for work use. Common qualifying items include:
- Hand tools and power tools specific to the trade, such as spanners, drills, or diagnostic equipment
- Protective clothing and safety equipment, where required for the job and not supplied by the employer
- Tool insurance, covering loss or damage to work equipment
- Union or professional body fees, in some trades, claimed alongside tool costs on the same form
Tools used for both personal and work purposes need an apportioned claim, reflecting only the work-related share of the cost.
How Much Can I Claim Back?
A basic-rate taxpayer typically reclaims 20% of the qualifying cost, while a higher-rate taxpayer reclaims 40%. For example, £1,000 spent on tools over a tax year results in a £200 rebate for a basic-rate taxpayer.
HMRC allows claims to go back up to four tax years, so tradespeople who have never claimed can often recover relief on several years of tool purchases in a single application, provided receipts or reasonable estimates support the figures.
Do I Need Receipts to Claim?
Receipts strengthen a claim and speed up processing, but HMRC does not always require every single one. Where receipts are missing, a reasonable estimate based on typical spending for the trade can support the claim, though HMRC may request evidence if the figures look unusually high.
Many trades also qualify for a flat rate expense, a fixed yearly amount HMRC sets for each occupation that needs no receipts at all. Claiming actual costs instead makes sense when real spending is higher than the flat rate. Keeping receipts going forward makes future claims, and any HMRC query on a past one, considerably easier to resolve.
How Do I Submit a Tool Tax Rebate Claim?
Two main routes exist for submitting this claim.
Through a P87 Form
Employees who are not required to file a full Self Assessment return generally use form P87, either online through the Personal Tax Account or by post. This route suits claims where total work expenses are under £2,500. Above that amount, HMRC requires the claim through Self Assessment instead.
Through a Self Assessment Return
Anyone already completing a Self Assessment return, for example due to other income, includes the tool claim within that return rather than submitting a separate P87. This applies to some contractors and CIS subcontractors, who often have both employment and self-employment income to report in the same year.
How Long Does a Tool Tax Rebate Take?
HMRC typically processes a P87 claim within 8 to 12 weeks, though this varies depending on the time of year and whether HMRC requests further evidence. A claim included within a Self Assessment return follows the standard return processing timeline instead, since it forms part of the overall tax calculation rather than a standalone request.
Tradespeople who already file a return, or who have several years of unclaimed tools, can hand the whole claim to our Self Assessment accountants in Slough, who check every qualifying cost and include it correctly in the return.
Frequently Asked Questions
Can I claim a tool tax rebate every year? Yes. Ongoing tool purchases can be claimed annually, not just as a one-off backdated claim for previous years.
What if my employer provides some tools but not others? Only the tools an employee personally funds qualify. Items the employer supplies or reimburses are excluded from the claim.
Does a tool tax rebate affect my tax code? It can. HMRC sometimes builds ongoing tool relief into the tax code rather than issuing a repeated cash refund, spreading the benefit across future pay periods. This relief raises the tax-free amount in the code, the opposite of a K tax code, which reduces it.
Can I claim for tools bought secondhand? Yes, provided the tools are used wholly for work and the cost is reasonably evidenced, secondhand purchases qualify in the same way as new ones.