Every allowable expense lowers your taxable profit — and for CIS subbies, raises the refund. Here’s what counts, what doesn’t, and how to capture it all.
Published June 2026 · 8 min read
Every legitimate business cost you record reduces the profit you pay tax on. For a basic-rate sole trader, a missed £20 receipt is roughly £5 of tax overpaid — and for CIS subcontractors those missed receipts are the difference between a decent CIS refund and a disappointing one. The rule of thumb HMRC applies: the cost must be incurred wholly and exclusively for the business.
Hand tools, power tools, repairs and replacements, hire charges. If it lives in the van and earns its keep on site, it’s a business cost.
Anything bought for jobs — timber, fixings, cable, paint, aggregate. Materials matter twice for CIS subbies: they’re deductible and itemising them on invoices keeps CIS deductions down, since deductions apply to labour only (see CIS deductions explained).
Two routes, and you must pick one per vehicle:
You can’t mix both for the same vehicle. And ordinary commuting to a single regular workplace isn’t claimable — travel between changing sites generally is.
Hi-vis, steel toecaps, gloves, helmets, branded workwear — yes. Everyday clothes you could wear anywhere — no, even if you only wear them for work.
The business share of your phone bill, stationery, software subscriptions (your SubReady subscription is itself an allowable business cost), bank charges on a business account, and accountant fees.
Public liability, tool cover, professional fees and licences (CSCS-type cards and renewals related to your trade).
Courses that update or maintain existing skills are allowable. Training for a brand-new trade generally isn’t.
You quote, invoice and do the books somewhere. A reasonable share of home costs for those paperwork hours is claimable — many sole traders use HMRC’s flat simplified rates to keep it easy.
Most tradespeople don’t overpay tax because they misread HMRC guidance. They overpay because receipts die in the footwell of the van. The fix is capturing the cost at the moment it happens:
Put numbers on the habit. A subbie with £30,000 of profit sits in the basic-rate band paying 20% Income Tax plus 6% Class 4 NI — so every £100 of expenses captured saves roughly £26. Miss five £20 receipts a week and that’s £100 a week of unclaimed costs — call it £1,300 a year of tax overpaid. For a CIS subcontractor the effect shows up as a smaller refund; for everyone else it’s a bigger January bill. Either way, the shoebox is expensive.
You need evidence of business costs, and receipts are the gold standard — but a typed record made at the time (amount, supplier, purpose) plus the matching bank line is far better than nothing. That’s exactly what typed expenses and statement matching give you.
If your turnover is under £1,000 you may not need a return at all; above it, you choose between the allowance and actual expenses — for working trades, actual expenses are almost always worth far more.
No — money you take out for yourself is just your money moving. Mark those bank lines as drawings so they never inflate your costs.
Do that all year and your Annual Return builds itself: income, expenses by category, mileage allowance and CIS deducted, ready for your accountant. Start with the 14-day free trial.
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