Can you claim VAT on tools?
Tax Rebate Services has been claiming back tool tax relief for mechanics, vehicle technicians and many other trades people since 2002.
We are often asked the question: Can you claim VAT on tools?
The quick answer is no if you are employed under PAYE, with it being a common misconception that the VAT paid on tools bought for work purposes is refundable.
The percentage of VAT paid on tools is very similar to the amount of tax relief applied through making a tool tax rebate claim under PAYE, which may be why there is some confusion around the subject.
Who can claim VAT back on tools?
To be able to be reclaim VAT you must be a VAT registered business meaning anyone who is normally employed under PAYE is not eligible to claim VAT back.
If you run your own business this is something your accountant will manage for you as part of your quarterly VAT return.
I am employed under PAYE can I claim a tool tax rebate?
Yes, you can by claiming capital allowances which allows for a percentage of the income tax paid through your PAYE salary to be refunded. This type of claim doesn’t affect your employer in any way and the tax rebate is repaid by HMRC directly to you as the tax payer.
The VAT paid on the item is not affected in any way when making a claim for capital allowances for tools.
How do I claim a tool tax rebate?
Like most things to do with money making a claim for your tools and toolboxes sooner rather than later is recommended to ensure you don’t miss out on the tax relief you are owed.
An official claim in writing must be made to the tax office within set timescales to be acceptable.
Receipts and or transaction reports from your tool provider will be needed. Your receipt evidence can include statements from online shops like Ebay and Amazon.
Under the capital allowances rulings there is no timescale for how far back you can claim as long as the item purchased is still in use however timescales apply.
To ensure that the maximum tax relief possible is given it’s very important to understand:
- How to produce a capital allowances schedule including purchases made before the previous four tax years.
- How to produce a capital allowances schedule which included the correct brought forward figures for the future.
- What is allowable as part of a capital allowances claim. Not all purchases are permissible.
- How to complete a self assessment tax return if it’s necessary.
It doesn’t matter what your job is if you buy tools for work you can claim a tax rebate. Just enter the total of how much you’ve spent on tools to get your tax rebate estimate.