A Construction Contractor’s Guide to Claiming Business Expenses
Working in construction as a self-employed CIS contractor means you can claim tax relief on legitimate expenses.
However, too many CIS self-employed people miss out on tax rebates because they don’t understand what they can claim for, or what process to follow. Equally, some contractors put themselves at risk because they claim for things which are not allowable or follow the wrong process in making their claim.
This guide breaks down the essentials: what expenses you can claim, how to make sure they’re legitimate, and how to get your rebate through your self-assessment tax return.
How Tax Relief on Expenses Works
If you incur expenses relating to your work as a CIS contractor, then HMRC allows you to claim tax relief. But it’s not automatic – you have to declare these expenses on your annual self-assessment tax return.
Once HMRC processes your return, you will receive a tax rebate, but you must make your claim compliantly.
The Golden Rule: Legitimate Expenses Only!
It’s important to remember that HMRC only allows expenses that are “wholly and exclusively” for your work. If an expense has a personal element, you can only claim the work-related proportion.
For example, if you buy tools that are used solely for work, you can claim the full cost. However, if you use your mobile phone for both work and personal calls, you can only claim a percentage based on business use.
Trying to claim for non-business items risks HMRC penalties, so stick to legitimate expenses.
Common Expenses Construction Contractors Can Claim
Here are some of the most relevant expense categories you can consider:
- Purchase and repair of tools and equipment
- Protective clothing such as hard hats, hi-vis jackets, steel-toe boots, and gloves. Note that everyday clothes (like jeans or trainers) are not claimable, even if you wear them on site.
- Vehicle expenses such as insurance, repairs, MOT and road tax if your vehicle is solely used for work. You can also claim for public transport, parking, and tolls; however, travel between home and your normal place of work isn’t allowed. The cost of travel to a temporary place of work can be allowable if you meet certain criteria. Please speak to a member of our team for advice.
- Building materials purchased for a job, as well as consumables like screws, nails, adhesives, or sandpaper.
- You can claim for admin materials such as stationery, printing, and postage, computer software and hardware used for work.
- Health and safety courses, machinery licences, or other training that keeps your skills up to date, as well as professional memberships or subscriptions relevant to construction.
- If you need insurance for public liability or professional indemnity, this can also be claimed.
Tips to Make Expense Claims Easier
- Keep every receipt – HMRC can ask for evidence of your expenses for up to six years. Keep receipts, invoices, and bank statements to back up your claims.
- Separate business and personal spending. Open a business bank account to make tracking easier. If you use one account for everything, you risk muddling up personal and business costs.
- Record expenses as you go. The deadline for filing your tax return is January 31st. Don’t leave it til the last minute to pull everything together. Update your records weekly or monthly. This makes doing your tax return much less stressful.
- Don’t over-claim. Be realistic. If you’re ever unsure, ask: ‘Would I have bought this if I wasn’t working?’ If the answer is no, it’s likely allowable. If yes, it probably isn’t.
Get Professional Help
As specialist contractor accountants, we can spot expenses you might miss and ensure your self-assessment return is accurate so that it is processed and your rebate provided without delay.
Timing It Right
Once the tax year ends on 5 April, you’ll need to declare your income and expenses in your self-assessment tax return (usually due by 31 January the following year). Although you don’t have to wait until then, you can submit your return any time after the start of the new tax year. Get in touch if you would like help in completing your tax return.
Let Us Help
Claiming legitimate business expenses is about making sure you don’t pay more tax than you should. For construction contractors, the amounts soon add up: tools, travel, materials, insurance, and more.
By keeping accurate records, saving receipts, and filing them correctly on your self-assessment, you’ll stay compliant while maximising your take-home pay.
Every pound of allowable expenses you record is a pound you don’t have to pay tax on. So take expenses seriously from day one, and your life as a CIS contractor will be on a much stronger financial footing.