Ana Terhovanessian, ACCA, accounting manager at Rapid Formations, shares her thoughts for small construction business owners following the Autumn Budget 2026
Following chancellor John Healey’s first Autumn Budget, construction SME owners and tradespeople, in particular, are reminded to review their business expenses and claim all available tax relief.
This April, the government increased the approved mileage rate for cars and vans from 45p to 55p per business mile for the first 10,000 miles. However, the government has been reviewing mileage rates beyond this tax year, including whether mileage rates will change after 2026/27.
For tradespeople – who often find themselves travelling between jobs to suppliers and customer sites – mileage can soon stack up. However, having a better understanding of which expenses they can claim for could make a real difference to their taxable profits and growth potential.
Beyond mileage, tradespeople and small construction business owners can also claim for protective clothing, tools and equipment, business insurance, accountancy fees, and subcontractor costs – all of which can soon add up, helping to ease some of the pressure of running your own business.
The tax rules and requirements for small businesses across the UK are ever-evolving, and it’s great to see that the government still prioritises them. However, it’s only useful if tradespeople and small business owners remember that to ensure good financial administration and futureproof their business, they need to go beyond simply submitting a tax return on time.
If you’re a small construction business owner or tradesperson looking to get the most out of the financial benefits available to you, here’s a quick guide on what expenses you can claim.
Business mileage
There is currently a flat rate for mileage for any cars or goods vehicles used while working. For the current financial year 2026/27, the flat rate allows you to claim 55p per mile for the first 10,000 miles and This means that if you’ve travelled a total of 11,000 miles over the course of the year, you could be entitled to claim £5,750 to cover costs incurred.
However, following this year’s Autumn Budget announcement, this figure will be increasing to 35p per mile from April, helping you save even more.
It’s worth noting that this only covers travel while working and doesn’t include any mileage clocked up while travelling between home and a permanent workplace.
Protective clothing
Protective clothing is a vital part of work in the construction sector. From hard hats to steel-toe cap boots, high-visibility jackets, and more, those costs can add up quickly. To help ease the burden, the government allows self-employed people, sole traders, and individuals in a business partnership to claim for buying, cleaning, or repairing any protective clothing needed for work.
However, ordinary everyday clothing is not covered and therefore is not a claimable expense.
Tools and equipment
Tools and equipment are often among the costliest expenses for construction business owners; however, there’s help at hand. It’s all about knowing which expenses you can claim.
If you’re a business owner, you can claim the purchase or repair of small tools and equipment, or everyday business items, as a business expense. You can even backdate your claim for the current tax year plus the four previous tax years through your annual Self Assessment tax return.
For larger machinery, tools, and equipment that last longer in the business and can be classed as fixed assets, claims must be made through capital allowances.
Subcontractors and staff
If you run a limited company and pay employees or bring in subcontractors to support you, costs for wages and payments for their services can be deducted from the company’s taxable profits, which can in turn reduce your corporation tax bill. In practice, if a builder brings in a subcontractor to work on a building renovation, for example, they may be able to deduct the subcontractor’s invoice as a company expense.
This will cover the subcontractor’s labour costs, any specialist trades hired to help complete a contract, agency labour, and temporary workers, as well as materials supplied by any subcontractors as part of their invoice.
In addition, if you have a limited company and employ tradespeople directly, you may be able to deduct employment costs from your taxable profits, too. This includes wages and salaries, employer National Insurance, employer pension contributions, recruitment and agency fees, training and work-related equipment, and protective clothing.
Accountancy and insurance
Professional fees and insurance are expenses that can often slip through the net when reviewing business expenditure, but they can be deducted from taxable profits for limited companies, so long as they meet HMRC’s rules. These include accountancy and bookkeeping fees, legal and professional fees, and insurance such as public liability, professional indemnity, and van and tool insurance. These expenses can be overlooked when focusing on more visible costs, but they can make all the difference.
However, keep a clear record of costs incurred by retaining all invoices and policy documents, and separating any personal expenditure from your business expenses. This will ensure that all eligible expenses are accounted for correctly.
Note that legal and professional fees can be claimed as an expense as long as they’re not related to capital expenditure.
Home office costs
For many small construction business owners and tradespeople, it may be assumed that most business expenses relate to time spent on site, but in some circumstances there may also be costs associated with managing a business from home that need to be accounted for.
Household expenses such as heating, electricity, phone costs, equipment, software, and stationery may be eligible for reimbursement for limited company directors who are regularly carrying out admin tasks at home.
While much of the guidance you’ll find online discusses the ability to claim flat-rate home-working expenses, one vital distinction worth highlighting is the difference between the rules for a limited company and a sole trader, as depending on which category you fall into, not every household expense will be claimable. It’s worth keeping a record and checking in with your accountant before making any household claims to be sure.
The Autumn Budget is always a crucial time for many business owners, and while this year’s budget hasn’t introduced any new deductions, it’s always one of the key moments in the year where the whole nation reflects on the country’s financial position and the implications for the coming year.
Small construction business owners should follow suit, using it as a timely reminder to do the same with their own business, making sure they’re taking stock and assessing their financial position, responsibilities, and potential tax-saving opportunities they may not be utilising to their full potential.
