“Can I claim that?” is a question you probably ask yourself often if you’re a CIS subcontractor or sole trader. Knowing what you can and can’t claim is one of the easiest ways to keep more of your money and better manage your cash flow. Every allowable expense you claim reduces your taxable profit, which means you’ll reduce the Income Tax and National Insurance you owe.
For the 2026/27 tax year, HMRC has introduced several major updates that will change how you get tax relief on items and equipment. We will explain the basics, the latest changes, and what you can claim.
What is a Business Expense?
A business expense is any cost you pay out while running your business. This includes your van, your phone bill, your tools, or your accountant fees. Some of these costs are actually fully claimable, some partly claimable, and some can’t be claimed at all.
What is an Allowable Expense?
An allowable expense is a business cost that HMRC lets you deduct from your income before your tax is worked out. As a CIS subcontractor, this matters: your contractor has already taken CIS deductions from your pay, so claiming every allowable expense can reduce your taxable profit and may mean you’re due a refund at the end of the year.
The key rule is that the cost must be “wholly and exclusively” for your business. If something is used for both work and personal reasons, such as a van you also use at weekends, you can only claim the business portion. Money you take out of the business for personal use (drawings) doesn’t count.
What is Tax Relief?
Tax relief means reducing the amount of tax you’re liable for. You can get it in two main ways as a sole trader:
- Allowable expenses for day-to-day running costs, deducted from your income.
- Capital allowances for bigger items that you keep and use, like machinery, equipment and vehicles.
Alternatively, you can use the £1,000 trading allowance instead of claiming your actual costs. But you can’t do both, so if your expenses are higher than £1,000, claiming them is usually better. (Source: Tax free allowances by GOV.UK)
What are the Latest Changes from HMRC for Tax Allowances?
There are three big changes affecting CIS subcontractors and sole traders this tax year:
A. Writing down allowances have been cut
From 6 April 2026, the main rate writing down allowance for sole traders and partnerships has dropped from 18% to 14% a year (Source: Capital allowances). This means that relief on older equipment and anything that doesn’t qualify for a first-year allowance now comes through a lot more slowly.
B. A new 40% first-year allowance
To balance this out, a new 40% first year allowance applies to qualifying main rate plant and machinery. Importantly, it’s available to unincorporated businesses like sole traders, who can’t use full expensing (Source: Tax relief by GOV.UK). It covers new and unused assets, but not cars or second-hand items.
C. Making Tax Digital for Income Tax is here
Since 6 April 2026, Making Tax Digital for sole traders and landlords has been in place, and those with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC. The threshold drops to £30,000 from April 2027, and you will now report to HMRC throughout the year, so good record-keeping matters more than ever.
List of Allowable Expenses for CIS Subcontractors.
Here is what you may be able to claim. Remember, everything must be for business use only.
Office and Admin Costs:
- Stationery, printing and postage.
- Phone, mobile and internet bills.
- Computer software and subscriptions.
- Bookkeeping and accounting software.
- Bank charges on your business account.
Business Premises & WFH:
- Rent and business rates for a workshop, yard or office.
- Heating, lighting and water for business premises.
- Storage unit or lock up costs.
- A share of household bills (heating, electricity, Council Tax, rent or mortgage interest) if you work from home.
Travel and Transport:
- Fuel, repairs, servicing, insurance and road tax for your van or car.
- HMRC’s simplified mileage rates instead.
- Parking and tolls (but not parking fines).
- Train, bus and taxi fares for business journeys.
- Hotels and reasonable meals when working away overnight.
Stock and Materials:
- Building materials and supplies used on jobs.
- Consumables like screws and fixings.
- Small tools.
- Skip hire and waste disposal.
- Plant and equipment hire.
- Protective clothing and PPE.
CIS Subcontractor tip: When a contractor pays you under CIS, the deduction should only be taken from your labour, and not the cost of materials you’ve supplied. Keep receipts for every material you purchase, so that your invoices and expenses add up.
Legal and Professional:
- Accountant and bookkeeping fees.
- Solicitor fees for business matters, such as contracts.
- Public liability, professional indemnity.
- Interest on business loans and overdrafts.
Pro tip: You can’t claim fines or legal costs for buying property or equipment.
Marketing & Training:
- Website costs, hosting and domain names.
- Advertising, flyers, business cards.
- Trade body and professional memberships.
- Training courses that update existing skills.
Capital Allowances:
- Vans, lorries and other business vehicles.
- Cars.
- Machinery.
- Computers, laptops.
Pro tip: Capital allowances apply to equipment, machinery and business vehicles. If you use cash basis, most of these are simply claimed as allowable expenses, except cars, which can still go through capital allowances.
Client Story
One of our clients is a self-employed electrician who is working as a CIS subcontractor for two local builders. He used to keep receipts in a carrier bag in his van and only claimed fuel and tool expenses. Everything else felt “too small” for him to bother with.
Going through his year, our accountants found that he’d missed his phone bill, public liability insurance, PPE, and his van insurance. He was also working from home in the evenings, doing quotes and invoices, so we also added a share of his household bills.
He had also just bought a new van and some new testing equipment. We made sure that they went through the right capital allowances, taking the April 2026 changes into account.
The result? A noticeably smaller tax bill, a CIS refund he didn’t realise he was owed, and a simple app on his phone to help him snap receipts as he goes. Now with Making Tax Digital, he’s all set for quarterly updates too.
Good News for CIS Subcontractors: We’ve Adopted Dext.
Lost receipts mean lost claims. That’s why we’ve adopted Dext, a receipt-capture app that turns your phone into a digital filing cabinet. Take a photo of a receipt on site, at the merchant’s counter, or at the fuel pump.
How it works?
Here’s how to use Dext in three simple steps. If you need more help, our accountants will guide you through it.
- Snap your receipt. Open the Dext app on your phone and take a photo of the receipt as soon as you’ve paid, whether that’s on site, at the merchant’s counter or at the fuel pump. You can also forward email receipts and invoices to your personal Dext email address.
- Let Dext read it. Dext pulls out the key details for you, including the supplier, date, amount and VAT. The paper copy is then stored securely, so you never need to worry about losing it.
- We handle the rest. Your receipts come straight through to us. We check each expense, claim it in the right place and keep your records up to date, ready for your quarterly updates and tax return.
Get in Touch With Us
Not sure what you can claim? At Fynax, we help sole traders and CIS subcontractors claim every expense they’re entitled to, stay on tip and up to do of the latest HMRC changes, and get ready for Making Tax Digital.
Get in touch with the Fynax team today for a friendly chat, and let’s make sure you’re not paying a penny more tax than you need to.
