Can I claim workshop or yard rent and business rates as a sole trader?

Yes. In 2026-27, rent, business rates, utilities, insurance and repairs on a workshop, yard or unit used for your trade are allowable expenses. Buying the building is not, and only the business share of mixed use counts.

Many trades outgrow the garage and rent a proper unit. This guide covers renting premises you work from. If you only need somewhere to keep tools and materials, our guide to a lock-up, storage unit or tool hire covers that. The rules below follow GOV.UK, the tax return notes and the Income Tax (Trading and Other Income) Act 2005, as checked on 17 October 2026.

What you can claim on business premises

GOV.UK lists rent for business premises, business and water rates, utility bills, property insurance and security as costs you can claim. It also says you can claim repairs and maintenance of business premises and equipment. You cannot claim for any non-business use of premises.

If part of the unit is used for something else, such as a hobby or storing household things, section 34 of the 2005 Act allows only the part used wholly for the trade. In our reading, splitting by floor space is a fair way to do it.

Buying or altering the building

The tax return notes say the cost of buying business premises is disallowable. Under the cash basis, the standard way sole traders keep their records, section 33A of the 2005 Act allows no deduction for capital spending on providing, altering or selling land, and a building counts as land. It does allow equipment fixed to the building, such as machinery, if it is expected to wear out or lose 90% of its value within 20 years. It does not allow spending on the building itself, or on walls, floors, ceilings, doors, gates, shutters, windows, stairs, drainage, sewerage or waste disposal systems, or lift shafts.

GOV.UK says alterations to install or replace equipment are an allowable expense on the cash basis, and go through capital allowances under traditional accounting. Our guide to the annual investment allowance covers that.

The building itself has its own relief. GOV.UK says the structures and buildings allowance is 3% a year of qualifying construction, renovation and fitting-out costs on a non-residential building, even if you lease it, for 33 and one third years. You need an allowance statement, and land and planning permission do not count. Section 1A of the Capital Allowances Act 2001 limits a sole trader on the cash basis to capital allowances on cars, so this is for traditional accounting only.

If you paid a premium for a lease, section 61 of the 2005 Act can treat part of it as a day-by-day expense where your landlord is taxed on it.

Business rates and small business rate relief

Business rates are a local tax, billed and collected by your council, separate from Income Tax. GOV.UK says the council decides whether you get relief, and the rules differ in Scotland, Wales and Northern Ireland.

In England, small business rate relief applies if your property's rateable value is less than £15,000 and your business uses only one property. At £12,000 or less you pay no business rates. Between £12,001 and £15,000 the relief tapers from 100% to 0%, so a rateable value of £13,500 gets 50% off. If the rateable value is below £51,000, your bill uses the small business multiplier, 43.2p from 1 April 2026 to 31 March 2027, even without relief. Retail, hospitality and leisure properties use a different multiplier. You claim the rates you actually pay, so if relief cuts your bill to nothing, there is nothing to claim.

A workshop at home

A workshop in your garden or garage is part of your home, not separately rented premises. You claim a share of household costs, or a flat rate, as our guide to working from home explains. GOV.UK says you may need to pay business rates as well as Council Tax if you sell to customers who visit, you employ people there, or you have made changes for the business, such as converting a garage. Contact the Valuation Office to find out (in Scotland, your local assessor; in Northern Ireland, Land & Property Services). The structures and buildings allowance does not apply to a structure in the grounds of a home.

A worked example

A joiner in England rents a unit on the cash basis in 2026-27. Its rateable value is £9,500 and it is the joiner's only property.

The joiner claims £9,800 (£6,000 + £1,200 + £350 + £450 + £1,800). The partition wall is spending on the building, so the cash basis gives no expense for it. This is an example only.

What this means for you

Running costs on a workshop or yard reduce your taxable profit, unless you take the £1,000 trading allowance instead of claiming expenses. Keep repairs separate from building work, and check with your council that any rates relief is applied.

Steps to claim workshop and yard costs

1. Keep the lease, rent invoices, rates bills, utility bills and insurance schedules.
2. Ask your council whether you qualify for small business rate relief.
3. Work out the business share if any space is used for personal things.
4. On the full self-employment pages, put rent, rates, power and insurance in box 21 and repairs in box 22 (box numbers from the 2025-26 notes).
5. If you include the cost of buying premises, or any personal share, put it in the disallowable box too: box 36 for box 21, box 37 for box 22.
6. Keep invoices for building work separately, in case the structures and buildings allowance applies.

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