Run a jewellery business and you'll know the costs add up fast. Bench tools, loupes, a laser welder, a fireproof safe, hallmarking fees, insurance on stock that's worth more than your van. The question is which of those you can actually claim against tax, and how.
This guide is the complete UK list of jewellery business expenses, written for sole traders, partnerships and small limited companies. We'll cover the everyday running costs, the kit that counts as capital, and the three things jewellers get wrong far more often than the average shop: the VAT margin scheme, the special accounting scheme for gold, and money-laundering registration.
We'll date every figure to the 2025/26 tax year and link straight to the gov.uk guidance behind each rule, so you can check our working.
What counts as an allowable jewellery business expense?
An expense is allowable if it's incurred wholly and exclusively for the purposes of your trade. If a cost is split between business and personal use, you can only claim the business portion. Money you simply take out of the business for yourself is never an expense.
That single test, "wholly and exclusively", is the backbone of everything below. HMRC's own list of allowable categories for the self-employed covers office costs, travel, stock and raw materials, staff costs, financial costs, premises, advertising and marketing, and business-related training. Jewellers fit every one of those, plus a few trade-specific extras.
A quick note on day-to-day costs versus kit. Consumables and running costs go through as ordinary expenses. Durable equipment you'll use for years (benches, a laser welder, a safe) is usually capital, and you claim it through capital allowances instead. We'll handle both.
Which running costs can a jeweller claim?
These are your bread-and-butter deductions, claimed in full in the year you incur them (or pay them, if you use the cash basis, which is now the standard way sole traders and partnerships record income and expenses from 6 April 2024 onwards).
Stock, materials and the things you sell on
- Loose gemstones, diamonds and pearls bought to set or resell
- Gold, silver and platinum bullion, casting grain, sheet and wire used in production
- Findings: clasps, settings, ear wires, chains, mounts
- Finished pieces bought in for resale
- Packaging: ring boxes, pouches, gift bags, branded tissue
HMRC lists "things you buy to sell on, for example stock or raw materials" as allowable. Watch the VAT treatment of bullion and second-hand goods though, which is where the quirks start (see the VAT sections below).
Workshop consumables and tools that wear out
- Solder, flux, pickle, polishing compounds, emery and burrs
- Saw blades, drill bits, small hand tools under your capitalisation policy
- Casting investment, crucibles, gloves, dust masks
- Cleaning and rhodium-plating solutions
Premises and workshop running costs
- Rent on your shop, studio or workshop
- Business rates
- Heating, lighting, water and power for the bench, kiln or laser
- Cleaning, waste removal and repairs to the premises
If you work from home, you can claim a reasonable proportion of household running costs, or use HMRC's simplified flat rate, but only the business share counts.
Insurance, security and financial costs
- Stock and tools-in-transit insurance (often a jeweller's biggest single overhead)
- Public liability and professional indemnity cover
- Alarm monitoring, CCTV subscriptions and safe maintenance
- Bank charges, card-processing fees and merchant terminal rental
- Accountancy and bookkeeping fees
HMRC explicitly lists "financial costs, for example insurance or bank charges" as allowable.
Selling, marketing and the rest
- Website hosting, your online shop platform and listing fees
- Photography of pieces, paid social and print advertising
- Trade-show stands and exhibition fees
- Travel to suppliers, fairs and customers (fuel, parking, train fares)
- Staff wages, employer's National Insurance and subcontracted bench work
- Trade subscriptions and business-related training courses
Hallmarking and assay office fees
Compulsory hallmarking at an Assay Office is a cost incurred wholly and exclusively for your trade, so the assay fees on pieces you make and sell are allowable running costs in the normal way.
Illustrative example. Priya, a sole-trader goldsmith, spends £180 in a year on Assay Office hallmarking and £640 on solder, burrs and polishing compounds. Both are consumable trade costs, so the full £820 reduces her taxable profit for 2025/26.
What jewellery equipment counts as capital, and how do you claim it?
Durable equipment isn't an everyday expense. It's a capital asset, and you claim tax relief through capital allowances rather than deducting it as a running cost. The good news for most jewellers is the Annual Investment Allowance (AIA).
The AIA lets you "deduct the full value of an item that qualifies" from your profits before tax, on most plant and machinery, up to a limit of £1 million for 2025/26. For a jeweller, that effectively means you can write off the whole cost of qualifying kit in the year you buy it.
Typical qualifying jewellery equipment:
- Workbenches, jeweller's stools and bench skins
- A laser welder or pulse-arc welder
- Casting machines, kilns, burnout ovens and vulcanisers
- Rolling mills, draw benches and polishing motors
- Ultrasonic and steam cleaners
- Fireproof safes and display cabinets fitted out for security
- Computers, tills and point-of-sale hardware
The AIA does not cover business cars, items you already owned before bringing them into the business, or items given to you. Those go into a capital allowances pool and attract writing down allowances instead, at 18% a year on the main rate pool for 2025/26.
| Item | Likely treatment | Relief for 2025/26 |
|---|---|---|
| Polishing compound, solder, burrs | Running cost | Full deduction in the year |
| Hallmarking and assay fees | Running cost | Full deduction in the year |
| Laser welder, casting kiln, safe | Plant and machinery | AIA, up to £1m, in full this year |
| A car used for the business | Not eligible for AIA | Writing down allowances only |
Illustrative example. Ravi buys a £9,000 laser welder and a £2,200 fireproof safe for his workshop in 2025/26. Both are plant and machinery, so he claims AIA on the full £11,200 against his profits this year, well inside the £1 million limit.
How does VAT work on gold and jewellery?
Here's where jewellery accounting stops being like any other shop. VAT on the metal itself is genuinely different from VAT on a finished ring, and getting it wrong is expensive. There are three regimes to know.
In short: most jewellery you make and sell is standard-rated at 20%, second-hand pieces can often use the margin scheme, and investment-grade gold has its own exemption plus a reverse-charge mechanism.
When is jewellery standard-rated?
A finished item of jewellery sold to a customer is a normal taxable supply at the standard rate of 20% for 2025/26. If you're VAT-registered, you charge VAT on the sale and reclaim VAT on your costs in the usual way. Nothing exotic here, this is the default.
What is investment gold, and why is it VAT-exempt?
Investment gold is a defined thing, not just "expensive gold". Under VAT Notice 701/21, investment gold is gold of a purity not less than 995 thousandths that's in the form of a bar or wafer of a weight accepted by the bullion markets, plus certain gold coins minted after 1800 of at least 900 thousandths purity that are, or have been, legal tender and are sold at no more than 180% of their open-market gold value.
Supplies of investment gold are normally exempt from VAT. That matters for a jeweller's costs: if you buy investment-grade bullion, there's usually no input VAT to reclaim because none was charged. It only becomes standard-rated if an eligible producer or transformer has formally opted to tax the supply, in which case their invoice will say so.
A trader who makes exempt investment gold supplies above set limits must also notify HMRC, and the notice points to a threshold of £5,000 for a single transaction (or £10,000 of supplies to one customer in a year). If you deal in bullion, that notification duty is easy to miss.
What is the special accounting scheme (reverse charge) for gold?
When standard-rated gold changes hands between two VAT-registered businesses, a reverse charge applies. Under the special accounting scheme for gold, the buyer, not the seller, accounts for the output VAT to HMRC (and can usually reclaim it as input tax under the normal rules). It was introduced to stop fraudsters charging VAT on gold and vanishing before paying it over.
If you sell gold under the scheme, your invoice must state the output tax separately and include wording to the effect of "£…… output tax on this supply of gold to be accounted for to HMRC by the buyer", and that figure must not be added into the normal total VAT charged. If you're the buyer, you account for that VAT on your own return. Keep the paperwork: HMRC expects records of these transactions, including customer identification, for six years.
When can you use the VAT margin scheme on second-hand jewellery?
If you buy second-hand jewellery or watches from private individuals (so no VAT was charged to you) and resell them, the VAT margin scheme lets you account for VAT only on your margin, not the full selling price. VAT due is the margin multiplied by 1/6 at the 20% rate.
Two hard rules jewellers trip over:
- You cannot use the margin scheme where VAT was shown separately on your purchase invoice. If a supplier charged you VAT, the item isn't eligible.
- You must not use a margin scheme to account for the sale of precious metals, investment gold or precious stones. So a second-hand finished ring can qualify, but loose investment-grade gold or loose stones cannot.
Illustrative example. Aisha buys a pre-owned gold watch from a private seller for £1,500 and resells it for £2,000. Her margin is £500, and the VAT due is £500 multiplied by 1/6, which is £83.33. She accounts for £83.33 of VAT rather than charging 20% on the full £2,000.
For higher-volume, lower-value second-hand stock, the global accounting scheme is a simplified variation that pools purchases and sales over a period rather than tracking each item, though the same exclusion for precious metals, investment gold and stones still applies. If your second-hand buying is a real part of the business, it's worth getting a Zmartly accountant to set the scheme up cleanly, because the records have to be watertight.
Do jewellers need to register for money-laundering supervision?
Possibly, and it's not optional once you cross the line. A high value dealer is any business or sole trader that accepts or makes high value cash payments of 10,000 euros or more (or the equivalent in any currency) in exchange for goods. Jewellers, dealing in portable high-value items, are squarely in HMRC's sights here.
The threshold catches a single payment of that size, a series of payments for one transaction that add up to it, and payments that look deliberately split to stay under the limit. If that's you, you must register with HMRC for money-laundering supervision, and you must not accept or make a high value cash payment until you've registered.
The fees themselves (registration and the annual premises charge) are ordinary business costs, so they're allowable. The point is the compliance: trading first and registering later isn't how the rules work.
Key takeaways
- The test for every cost is "wholly and exclusively" for the trade, business share only.
- Consumables, hallmarking fees, insurance, premises and marketing are deductible running costs.
- Durable kit (welders, kilns, safes) is capital, and AIA usually lets you claim it in full, up to £1m for 2025/26.
- Finished jewellery is standard-rated at 20%; investment gold is exempt with a reverse charge between VAT-registered traders; second-hand pieces can use the margin scheme, but never precious metals, investment gold or loose stones.
- Take 10,000 euros or more in cash and you must register as a high value dealer before the deal, not after.
Want help mapping your jewellery costs to the right tax treatment, from bench tools to the gold reverse charge? Book a free 20-minute call with a Zmartly accountant who works with jewellery businesses every day.
Frequently asked questions
Can I claim my jeweller's workbench and tools as a business expense?
Small consumable tools that wear out, like burrs, saw blades and polishing compounds, are running costs you deduct in full. A workbench and durable equipment such as a laser welder or kiln are capital items, and you usually claim them in full through the Annual Investment Allowance, which covers most plant and machinery up to £1 million for 2025/26.
Are hallmarking and assay office fees tax-deductible?
Yes. Compulsory hallmarking is incurred wholly and exclusively for your trade, so assay office fees on pieces you make and sell are an allowable running cost, deducted from your profits in the normal way.
Do I charge VAT on gold jewellery?
A finished item of jewellery sold to a customer is standard-rated at 20% for 2025/26 if you're VAT-registered. Investment gold is different: it's normally exempt from VAT, and standard-rated gold sold between VAT-registered businesses uses the special accounting scheme, where the buyer accounts for the VAT.
Can I use the VAT margin scheme on second-hand jewellery?
Often, yes, where you bought the item without being charged VAT (for example from a private seller). You then pay VAT only on your margin. But you must not use the margin scheme for precious metals, investment gold or precious stones, and you can't use it where VAT was shown separately on your purchase invoice.
Does a jeweller need to register for money-laundering supervision?
You must register with HMRC as a high value dealer if you accept or make cash payments of 10,000 euros or more (or the equivalent) for goods, including payments split to stay under the limit. You must register before you accept or make such a payment.
