Can I Claim a Card Machine on Tax? Sole Traders and Limited Companies
Yes. How to claim a card reader and card transaction fees on tax in the UK: expense or capital allowances, the Annual Investment Allowance, VAT, and the sole trader trading allowance trap.
Quick Answer
Yes. A card machine is business equipment, so you deduct the cost from your profit: sole traders on the cash basis claim it as an expense, otherwise it qualifies for capital allowances and the Annual Investment Allowance (up to £1,000,000) usually gives a full deduction in the year you buy it. Card fees and rental are ordinary business costs.
Last updated: October 2026.
If you take card payments, three costs usually appear: the reader itself, the fee on each sale, and sometimes a monthly charge for the terminal or software. All three are allowable for a sole trader or a limited company. The part that confuses people is how you claim the reader, because it is a purchase, not a running cost. This guide explains it.
How do I claim the cost of a card reader?
You claim it as business equipment. HMRC treats equipment you buy to keep and use in the business as plant and machinery. The route depends on how you are set up:
| You are | How you claim the reader |
|---|---|
| Sole trader using the cash basis | As an ordinary allowable expense in the year you buy it |
| Sole trader using traditional accounting | Capital allowances (usually the Annual Investment Allowance) |
| Limited company | Capital allowances (usually the Annual Investment Allowance) |
For sole traders on the cash basis, HMRC says that apart from cars, items you buy and keep for the business are claimed as allowable expenses in the normal way. For everyone else, capital allowances apply to equipment and machinery.
Either way, a card reader that you use only for business is deducted in full, normally in the year you buy it.
What is the Annual Investment Allowance and does it cover a card machine?
The Annual Investment Allowance (AIA) is a 100% deduction on most equipment you buy, up to a yearly limit. It is £1,000,000 for sole traders, partnerships and limited companies, and you get a new allowance for each accounting period. A card reader costs a tiny fraction of that, so the whole cost is relieved in the year of purchase.
Points to know:
- The purchase date is usually the date you signed the contract if payment is due within four months. Otherwise it is the payment due date.
- If you pay for the reader in instalments on hire purchase, you can claim on all the payments once you start using the item, but not on the interest.
- Limited companies controlled by the same person share one AIA between them. That only matters if you buy a lot of equipment across several companies.
- If your accounting period is not 12 months, the allowance is scaled down. A nine-month period gives 9/12 of £1,000,000.
- If you use the reader partly for personal reasons, a sole trader must reduce the claim by the business-use proportion.
Our guide to capital allowances in the UK covers the other allowances, and what changes from April 2026 is worth a look if you are buying bigger equipment.
Can I claim card transaction fees?
Yes. Fees you pay to take card payments are financial costs. HMRC lists financial costs, for example insurance or bank charges as allowable expenses for sole traders. A limited company deducts the same type of cost in the same way.
That covers:
- the percentage or flat fee charged on each card sale
- a monthly fee for the terminal or for renting the reader
- monthly software or gateway fees that come with the terminal
- chargeback fees
A practical point: many card providers (Stripe, Square, SumUp, Zettle and similar) take their fee from the sale before they pay you. Your bank statement then shows a smaller payment than the sale you invoiced. Record the full sale as income and the fee as a separate cost. If you only record the net amount, your income looks lower than it was, and your sales will not match your invoices or your VAT records.
For example, if you take £60,000 in card sales in a year and your provider charges 1.5%, the fees are £900. That £900 is a deductible cost. A sole trader paying income tax at 20% saves £180 of tax on it. These figures are illustrative: your own fee rate and tax rate will differ.
Do I pay VAT on card fees, and can I reclaim it?
It depends on the provider and the type of charge, so read the invoice rather than assuming. Some card fees are charged without VAT and some carry VAT, and a terminal rental charge or a software add-on can be treated differently from the transaction fee itself.
If you are VAT registered, you can normally reclaim VAT that appears on a valid invoice for the reader and for any fees that carry VAT. If a fee has no VAT on it, there is nothing to reclaim. If you are unsure how your provider treats a particular charge, ask them in writing. Our guide to registering for VAT explains when you need to register.
The sole trader trading allowance trap
There is one situation where you cannot claim a card machine at all. If you use the £1,000 tax-free trading allowance, you cannot claim expenses or capital allowances.
That means you have to choose. Use the trading allowance and ignore all your costs, or claim your real costs. If your card fees and equipment come to more than £1,000 a year, claiming your costs wins. If you earn only a small amount, the allowance may be simpler. Do the sum before you file your Self Assessment return.
What if I use the card machine for personal sales as well?
You can only claim the business part. HMRC says that if you use an account or item for both personal and business spending, you can only claim the business portion. A card reader used only to take payments for your trade is fully business. A reader you also use to split a personal bill is not, though that is rare.
What if I bought the reader second-hand, or got it free?
If you paid for it, claim what you paid, whoever you bought it from. If your payment provider gave you the reader free, there is no cost to claim for the reader itself. You still claim the transaction fees and any monthly charges you pay.
Keep the order confirmation, invoice and bank record. HMRC expects you to keep business records, and our guide to record keeping requirements covers how long.
Limited company or sole trader: is there any difference?
The principle is identical. The differences are mostly in the paperwork:
| Sole trader | Limited company | |
|---|---|---|
| Where you claim | Self Assessment, self-employment pages | Company Tax Return (CT600) and the company accounts |
| Reader claimed as | Expense (cash basis) or capital allowance | Capital allowance, usually AIA |
| Card fees | Allowable expense | Allowable expense |
| Trading allowance | Can use it instead of claiming costs | Not available |
If your company is VAT registered, record the reader and fees net of VAT and put the VAT on the return. See our guides to allowable expenses for a limited company and for sole traders.
How to record a card machine in your books
- Keep the purchase invoice for the reader.
- Record the reader as equipment, or as an expense if you are a cash-basis sole trader.
- Record each card sale at its full value.
- Record the provider's fees as a separate cost, matched to the payout.
- Do the same for monthly terminal or software charges.
- Reconcile each payout from your provider to your bank account.
AccountsOS can match the payouts to the sales and split out the fees for you. Finn flags a payout that does not add up to the sales behind it, so a missing fee does not sit unnoticed until your return.
Frequently Asked Questions
Can I claim a card machine on tax?
Yes. A card reader is business equipment, so you deduct its cost from your profit. Sole traders on the cash basis claim it as an expense, and everyone else claims capital allowances, normally covered in full by the Annual Investment Allowance.
Can I claim card machine fees as a business expense?
Yes. Transaction fees, monthly terminal charges and software fees are ordinary business costs. They are deducted in the year you incur them.
Is a card reader a capital expense or a normal expense?
It is a capital purchase, but it is relieved in full in the year you buy it, either as an expense on the cash basis or through the Annual Investment Allowance, which is £1,000,000.
Can I claim a card machine if I use the trading allowance?
No. If you use the £1,000 trading allowance, HMRC says you cannot claim expenses or capital allowances. Compare the allowance with your actual costs to see which saves more tax.
Can I claim VAT on a card machine?
If you are VAT registered and the invoice shows VAT, you can normally reclaim it. Some card fees carry no VAT, so check each charge on your invoice.
Do limited companies claim a card machine differently?
The company claims capital allowances on the reader, usually through the Annual Investment Allowance, and deducts the fees as a business cost. It does this on the Company Tax Return, not Self Assessment.
What if my payment provider gave me the reader for free?
Then there is no cost to claim for the reader. You still claim the transaction fees and any monthly charges you pay.
Sources
- GOV.UK: Annual investment allowance
- GOV.UK: Capital allowances
- GOV.UK: Expenses if you are self-employed, other expenses
This guide is general information, not tax advice. Check your own position with an accountant or HMRC.
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