Can I claim tools and equipment under CIS?

At Towerstone Accountants we provide specialist CIS accountancy services for contractors, subcontractors, and construction businesses across the UK. We created this webpage for people working in construction who want clear guidance on CIS, including registration, deductions, refunds, and common compliance tasks, without jargon. Our aim is to help you stay compliant with HMRC, avoid costly errors, and keep your records in good order.

This is one of the most common questions I am asked by people working in construction, and it is easy to see why. If you are working under the Construction Industry Scheme and you have CIS deducted from your income, every legitimate expense matters. Tools and equipment are often essential to earning that income, yet there is a lot of confusion about what can be claimed, how it is claimed, and whether CIS changes the rules.

The short answer is yes, in most cases you can claim tools and equipment as allowable expenses under CIS, but the detail really matters. What you can claim, when you can claim it, and how it affects your tax position depends on whether you are self employed or operating through a limited company, how the tools are used, and whether the cost is treated as a revenue expense or a capital asset.

In this article I will explain how claiming tools and equipment works under CIS, what HMRC allows, what is commonly disallowed, how capital allowances fit in, and how CIS deductions interact with expense claims. I will also cover common mistakes I see and how to avoid them, so you can claim what you are entitled to without creating problems later.

Understanding CIS and expenses

The first thing to clear up is a misunderstanding I see all the time. CIS does not change the rules on what expenses you can claim. CIS is a tax collection mechanism, not a separate tax system with its own expense rules.

Whether you work under CIS or not, allowable expenses are determined by general UK tax law. The key principle is that expenses must be incurred wholly and exclusively for the purposes of your trade.

CIS deductions are simply amounts taken off your income on account of tax. When you later calculate your actual tax liability, allowable expenses reduce your taxable profit, and the CIS already deducted is set against the tax due.

This means that claiming tools and equipment works in the same way as it would for any other self employed person or limited company, even though the cash flow timing may feel different under CIS.

Claiming tools and equipment as a CIS subcontractor

Most CIS subcontractors fall into one of two categories. They are either self employed sole traders, or they operate through a limited company. The rules are similar in principle, but the mechanics differ slightly.

If you are self employed under CIS, you claim expenses through your Self Assessment tax return. If you are a limited company, expenses are claimed through the company accounts and corporation tax computation.

In both cases, tools and equipment can be allowable, but how they are treated depends on their nature and cost.

What counts as tools and equipment

Tools and equipment generally include items you need to carry out your construction work. This can range from small hand tools through to larger powered equipment.

Common examples include drills, saws, grinders, nail guns, measuring equipment, ladders, and site safety equipment. It can also include specialist tools specific to your trade.

The key question HMRC looks at is whether the tool is necessary for your work and used for business purposes.

Revenue expenses versus capital items

One of the most important distinctions when claiming tools is whether the cost is treated as a revenue expense or a capital item.

Smaller tools with a relatively short lifespan are often treated as revenue expenses. These are deducted in full from your income in the year you buy them.

More expensive items, or tools expected to last several years, are usually treated as capital assets. These are not deducted in one go, but instead claimed through capital allowances.

This distinction matters because it affects the timing of tax relief, even though the overall relief is often similar over time.

Claiming small tools as allowable expenses

For many CIS workers, most tools fall into the category of small tools.

Items like hand tools, basic power tools, consumables, and protective equipment are usually allowable as day to day business expenses, provided they are used for work.

Examples include:.

• Hammers, screwdrivers, and hand saws

• Cordless drills and batteries

• Tape measures and levels

• Protective gloves, helmets, and safety boots used on site

These costs are normally deducted in full in the year you incur them.

However, the tools must be for work use. If an item has significant private use, HMRC may restrict the claim.

Capital allowances on larger tools and equipment

Larger or more expensive tools are usually treated as capital assets. This includes items like heavy duty machinery, specialist equipment, or tools with a long useful life.

Rather than claiming the full cost as an expense, you claim capital allowances, most commonly through the Annual Investment Allowance.

The Annual Investment Allowance allows you to deduct the full cost of qualifying equipment in the year of purchase, up to a very high annual limit, which for most small construction businesses is more than sufficient.

In practical terms, this means that even though an item is capital in nature, you often still get full tax relief in the year you buy it.

Claiming tools when working under CIS as a sole trader

If you are self employed and working under CIS, you include tools and equipment costs in your business expenses on your Self Assessment tax return.

Your gross income is declared before CIS deductions, your allowable expenses reduce your taxable profit, and the CIS deducted is then set against the tax due.

This is why many CIS subcontractors receive tax refunds. The CIS deducted is often more than the final tax liability once expenses like tools, mileage, and other costs are taken into account.

Claiming tools under CIS as a limited company

If you operate through a limited company, the company claims the cost of tools and equipment as business expenses or capital allowances in its accounts.

CIS deducted from company income is not reclaimed through the corporation tax return. Instead, it is offset against PAYE liabilities.

However, the principle is the same. The cost of tools reduces the company’s taxable profit, which in turn reduces corporation tax.

The company must pay for the tools, or reimburse the director if they are purchased personally and introduced into the business.

Personal use and dual purpose tools

One area where claims often go wrong is private use.

If a tool is used exclusively for work, it is usually fully allowable. If it is used partly for private purposes, HMRC may restrict the claim.

For example, a specialist site tool used only on construction projects is clearly business related. A general tool used equally for DIY at home may be challenged.

For limited companies, private use of company owned assets can also create benefit in kind issues, so this needs to be handled carefully.

Replacing tools versus buying new ones

Replacing worn out tools is generally straightforward. If a tool is replaced like for like, the cost is usually allowable.

Upgrading tools can still be allowable, but if the upgrade significantly improves capability rather than simply replacing an existing item, HMRC may look more closely at whether it should be treated as capital.

From experience, keeping clear records of why tools were purchased helps support the claim.

Consumables and protective equipment

Consumable items are usually allowable as revenue expenses. This includes items that are used up quickly or need frequent replacement.

Protective equipment required for site work, such as gloves, helmets, goggles, and high visibility clothing, is generally allowable, provided it is genuinely for work.

Ordinary clothing, even if worn on site, is not usually allowable, which is a distinction that often causes frustration.

Tools provided by contractors

If a contractor provides tools or equipment, you cannot claim a deduction for something you have not paid for.

Similarly, if a contractor reimburses you separately for tool costs, you should not also claim the cost as an expense, as this would amount to double relief.

Understanding what you are actually bearing the cost of is important.

Record keeping for tools and equipment

Good records are essential when claiming tools and equipment.

You should keep:.

• Receipts or invoices showing the cost

• Proof of payment

• Notes on what the tool is used for

• Records of any private use

For capital items, you should also keep a simple asset record showing purchase date and cost.

These records support your tax return and make it far easier to respond to HMRC queries.

Common mistakes I see under CIS

There are several recurring issues when it comes to tools and CIS.

One is assuming that CIS deductions somehow limit what can be claimed. They do not.

Another is claiming tools as expenses when they are clearly capital items, without applying capital allowances correctly.

I also see people fail to claim legitimate tool costs at all, because they assume CIS has already taken care of their tax.

Tools bought before CIS work starts

Tools purchased before you start working under CIS can often still be claimed, provided they were bought for the purpose of the trade.

For self employed individuals, this usually involves treating the tools as introduced into the business at their value when trading starts.

This is another area where advice can help ensure claims are made correctly.

How tools and equipment affect CIS refunds

Tools and equipment expenses reduce your taxable profit. Lower taxable profit means lower tax liability.

When CIS deductions exceed that liability, a refund arises.

This is why claiming all allowable expenses, including tools, is so important. Failing to claim them means paying more tax than necessary.

HMRC enquiries and tools claims

Tools and equipment claims are common and generally accepted, but they can be queried if they appear excessive or unclear.

Having proper records and a clear explanation of business use usually resolves issues quickly.

From experience, problems arise not because tools are claimed, but because claims are poorly documented.

Planning ahead and claiming efficiently

From a forward looking point of view, planning tool purchases can help manage cash flow and tax.

Buying necessary equipment before the end of a tax year can accelerate tax relief, which is particularly useful if CIS deductions have been high.

However, purchases should always be commercially justified, not driven solely by tax.

Final thoughts

Yes, you can claim tools and equipment under CIS, provided they are genuinely for your construction work and claimed correctly.

CIS does not restrict your ability to claim expenses. It simply affects how and when tax is collected.

In my experience, tools and equipment are one of the most significant and legitimate expense categories for construction workers. When claimed properly, they reduce taxable profit, improve cash flow, and help ensure you are not paying more tax than necessary.

The key is understanding the difference between revenue expenses and capital items, keeping good records, and not assuming that CIS deductions mean your tax affairs are already settled. When those pieces are in place, claiming tools and equipment under CIS becomes a routine and sensible part of managing your finances in construction..

You may also find our guidance on what is a cis deduction and How can an accountant help with CIS bookkeeping helpful when dealing with related CIS questions. For a broader overview of CIS rules, compliance, and support, you can visit our cis guidance hub.