Autumn Budget ‘timely reminder’ for construction SMEs to review business allowances

Ana Terhovanessian ACCA is Accounting Manager at Rapid Formations, a Companies House-approved company formation agent that specialises in the registration of limited companies and LLPs. Here, she shares her thoughts for small construction business owners following the Autumn Budget 2026.

As the nation following Chancellor John Healey's first Autumn Budget, for construction SME owners and tradespeople especially, it serves as a timely reminder to ensure they've reviewed their business expenses and claimed all the tax relief available to them.

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 is has been reviewing mileage rates beyond this tax year, with the Chancellor revealing the outcome of that review in the upcoming budget, as well as 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 tax requirements for small businesses across the UK are ever-evolving, and it's great to see that it's still very much a priority for the government. 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 for.

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 25p per mile after 10,000 miles. 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

The need for 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 soon add up. To help ease the burden, the government does allow those who are self-employed, sole traders, or 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 so will not be a claimable expense.

Tools and equipment

Tools and equipment will often be one of the costliest expenses for construction business owners; however, thankfully there's help at hand. It's all about knowing which expenses you can claim for.

If you're a business owner, then you'll be able to claim the purchase or repairs of any 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 will need to be done through capital allowances.

Subcontractors and staff

If you run a limited company and pay employees or bring in subcontractors to support, costs for their wages and payment of their services can be deducted from the company's taxable profits, which can in turn reduce your corporation tax bill. How this works in practice is that 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 traders 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 pensions 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 claiming accountancy and bookkeeping fees, legal and professional fees, and insurance, such as public liability, professional indemnity, van and tool insurance. These are all expenses that can be overlooked while focusing on more visible expenses, but they can make all the difference.

However, be sure to maintain a clear record of costs incurred by keeping 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, there can be the assumption that most business expenses will be related to time spent on site, but in some circumstances, there may also be costs associated with managing a business from home, which will need accounting for, too.

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 will discuss the ability to claim flat-rate home-working expenses, one vital distinction that's worth highlighting is the difference between the rules for a limited company compared to 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 for them to do the same with their own business, making sure they're taking stock and assessing their own financial position, their responsibilities, and the potential tax saving opportunities that they may not be utilising to their full potential.