Quick Summary
- Employed mechanics who buy their own tools can claim tax relief on them, often backdated up to 4 years.
- Mobile mechanics can claim van, tools, diagnostic equipment, parts, insurance and training.
- Parts you buy for customer jobs are cost of sales — keep invoices matched to each job.
- Garages need to manage stock, payroll and VAT — the MOT test fee itself is outside the scope of VAT.
- Turnover, not profit, decides VAT registration and Making Tax Digital — and parts push turnover up fast.
Mechanics spend a lot on tools, equipment and parts — and that makes getting your tax right especially valuable. Whether you're an employed technician at a dealership, a mobile mechanic working from your van, or you run your own garage, this guide explains what you can claim and what to watch out for.
Employed mechanics: claim tax relief on your tools
Many employed mechanics and vehicle technicians buy their own hand tools and pay for their own overalls. If your employer doesn't reimburse you, you can claim tax relief:
- Flat rate expenses — HMRC sets fixed annual amounts for many trades, covering the cost of tools and cleaning or replacing specialist clothing. You don't need receipts.
- Actual costs — if you spend more than the flat rate, you can claim what you actually spent on tools needed for your job, with receipts.
You can claim online through HMRC, or on your tax return if you already file one. Claims can usually be backdated up to 4 years, and the relief is normally given by adjusting your tax code or as a refund. If you've never claimed, it's worth checking.
Self-employed and mobile mechanics
If you work for yourself, you pay tax on your profit — your income minus allowable expenses. Common expenses for mobile mechanics include:
| Expense | How it's claimed |
|---|---|
| Van | Capital allowances on the van plus running costs, or simplified mileage (45p/25p a mile) — not both |
| Tools and equipment | Usually 100% relief through the Annual Investment Allowance |
| Diagnostic equipment and software | Equipment through capital allowances; subscriptions as running costs |
| Parts and consumables | Cost of sales — oils, filters, brake pads bought for jobs |
| Motor trade insurance | Fully allowable, along with public liability insurance |
| Waste disposal | Oil, tyres and parts disposal charges |
| Training | Courses that update existing skills, e.g. EV or hybrid training |
| Phone, website and advertising | Business proportion |
Tip: keep each parts invoice matched to the customer job. It makes your records clear and helps if HMRC ever asks questions.
Running a garage
Stock
At your year end, count the parts and tyres you hold. Unsold stock isn't an expense until it's used, so your accounts need an accurate stock figure.
VAT
Parts and labour both count towards the £90,000 VAT threshold, so a garage can reach it quickly even when profits are modest. Points to know:
- Repairs, servicing and parts are standard-rated at 20%.
- The MOT test fee itself is outside the scope of VAT, up to the maximum statutory fee. Any repair work is standard-rated.
- Garages selling second-hand cars can often use the VAT margin scheme, paying VAT only on the profit margin.
Staff
Employing technicians means PAYE payroll, auto-enrolment pensions and the National Minimum Wage for apprentices and staff. See our auto-enrolment guide.
Sole trader or limited company?
As profits grow, running a garage through a limited company can reduce tax and limit your personal liability. We'll compare both options with your actual figures before you decide.
Making Tax Digital
From 6 April 2026, self-employed people with turnover (not profit) over £50,000 must keep digital records and send quarterly updates to HMRC using compatible software. The threshold drops to £30,000 from April 2027 and is planned to drop to £20,000 from April 2028. See our Making Tax Digital guide.
Frequently Asked Questions
Can mechanics claim tax back on tools?
Yes. Employed mechanics who pay for their own tools can claim HMRC's flat rate expense or their actual costs, and can usually backdate the claim up to 4 years. Self-employed mechanics claim tools as a business expense.
What can a mobile mechanic claim as expenses?
Van costs or mileage, tools, diagnostic equipment, parts used for jobs, motor trade and public liability insurance, waste disposal, training, phone and advertising costs.
Do I charge VAT on an MOT?
The MOT test fee itself is outside the scope of VAT, up to the maximum fee set by the government. Repairs carried out as part of or after the MOT are standard-rated at 20% if you're VAT registered.
Do mechanics need to register for VAT?
Only if taxable turnover goes over £90,000 in a rolling 12 months. Parts sales count towards turnover, so garages can hit the threshold sooner than expected.
Should my garage be a limited company?
It depends on your profits and plans. Limited companies pay Corporation Tax at 19% to 25% and limit personal liability, but have more admin. We can compare the figures for you.
Accountant for Mechanics and Garages
Tool tax rebates, self-employed tax returns, and full accounts, VAT and payroll for garages in Glasgow and Clydebank.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.