Sole traders & freelancers

How much tax will I save buying equipment?

Buying a van, laptop, camera, tools or machinery for your business? Most of it can come straight off your taxable profit this year under the Annual Investment Allowance — so the taxman effectively pays for a chunk of it. Put in your profit and what the kit costs to see the Income Tax and National Insurance you save, and what the equipment really costs you once the relief is in.

Your purchase

Rough figures are fine. Nothing is sent anywhere; this runs entirely in your browser.

Expected profit this year your trading profit for 2026/27, before this purchase

What the equipment cost the price you paid, excluding any VAT you reclaim

Business use %: reduce the claim if you also use it privately

Student loan plan repaid through Self Assessment on your profit

Why the tax saving depends on your profit

A capital allowance is a deduction from your profit, so the tax it saves is worked out at your top rate — the rate the last slice of your profit is taxed at. A basic-rate sole trader saves about 26% (20% Income Tax plus 6% Class 4 National Insurance); a higher-rate one saves about 42%; and anyone whose profit is between £100,000 and £125,140 saves a remarkable 62%, because the purchase also claws back their tapered Personal Allowance. The calculator above uses your figures rather than a flat guess, so the "net cost after tax" is real.

The Annual Investment Allowance

The AIA lets you deduct the full cost of qualifying plant and machinery — tools, computers, equipment, machinery and commercial vehicles such as vans — in the year you buy it, up to £1,000,000 a year. That is far more than almost any sole trader will ever spend, so in practice the whole cost of the kit comes off this year's profit. Business cars are the main exception: they get slower writing-down allowances instead.

Getting it right

Claim in the year you bought the item — the date you signed the contract, if you pay within four months
Keep the receipt or invoice; capital items go in a different box on your tax return from everyday expenses
If you use it privately too, scale the claim down to the business-use share — the calculator does this above
Buying a car? It doesn't qualify for the Annual Investment Allowance — the relief is spread over several years instead
If you use the cash basis, most equipment is simply a deductible expense anyway — the tax saving is the same

More free tools

Full tax bill calculator →Your complete Self Assessment bill for 2026/27, broken down line by line. How much to set aside →The slice of every invoice to bank so January isn't a shock. Mileage & expenses →Claiming for a vehicle you use for work, the simple flat-rate way. Working from home →The flat-rate allowance for running your business from home.

Common questions

How much tax do I save by buying equipment for my business?

You save tax at your marginal rate on the cost you can claim. For a basic-rate sole trader that's about 26% (20% Income Tax plus 6% Class 4 National Insurance), so a £2,000 laptop saves roughly £520 and really costs about £1,480. A higher-rate trader saves about 42%. The calculator above uses your own profit to work out the exact saving and the net cost after relief.

What is the Annual Investment Allowance?

The Annual Investment Allowance (AIA) lets you deduct the full cost of qualifying plant and machinery from your profits in the year you buy it, rather than spreading it over several years. The limit is £1,000,000 a year, which covers virtually any sole trader's spending, so in practice you get 100% of the cost off this year's taxable profit.

Can I claim capital allowances on a van or a car?

A van, lorry or other commercial vehicle counts as plant and machinery and qualifies for the Annual Investment Allowance, so you can usually deduct its full cost in the year you buy it. A car does not qualify for the AIA — instead you claim writing-down allowances, which spread the relief over several years at a rate that depends on the car's CO₂ emissions.

What if the equipment cost more than my profit?

You can only save tax against profit you actually made this year. If the claim is bigger than your profit, the excess isn't lost — it creates a loss you can carry forward against future profits, or you can choose to claim writing-down allowances instead so the relief lands in a year when you have more profit. The calculator flags when your claim is larger than your profit.

Do capital allowances reduce my National Insurance too?

Yes. Class 4 National Insurance is charged on your profit after capital allowances, so claiming for equipment cuts your Class 4 bill as well as your Income Tax — that's why the total saving is more than the headline Income Tax rate. If you repay a student loan through Self Assessment, that falls a little too, because it's also based on your profit.

Plan the purchase before you buy it

This page shows the saving on one purchase. The paid Self Assessment Tax Estimator lets you model the whole year — drop in a planned van or kit and watch your bill, your monthly set-aside and your payment-on-account dates update, so you can time a purchase to land the relief where it helps most.

Self Assessment Tax Estimator 2026/27 — your whole bill, salary plus self-employment, with capital purchases, the monthly set-aside and payment-on-account dates worked out for you.
Freelance Day-Rate & Profit Calculator — work backwards from the take-home you need.
Rental Property ROI & Yield Calculator — for anyone with a buy-to-let alongside.
Invoice Tracker & Log — paid, outstanding and overdue, automatically.

Excel and Google Sheets. Working formulas, not just formatting. Built and checked by us, with AI assistance, and every calculation verified.

Get the Tax Estimator — £9 →

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