Allowable bench tools, precious-metal stock, hallmarking, home-workshop costs, VAT and MTD explained for UK self-employed jewellers and silversmiths.
The tax catch for a jewellery maker is the metal. A freelancer with a laptop deducts almost everything they spend the moment they spend it. A jeweller who buys a kilo of sterling silver, a parcel of sapphires and a coil of gold wire has not bought an expense; they have bought stock. That distinction quietly trips up more bench jewellers at Self Assessment time than any other, because the obvious instinct is to deduct everything you paid for materials this year when the rules only let you relieve what ended up in pieces you actually sold.
This guide is built around how a maker really trades: precious-metal and gemstone stock, the bench tools and equipment that qualify for full relief, hallmarking and assay-office costs, the home-workshop running costs that most jewellers underclaim, and the VAT and MTD rules that hinge on turnover rather than profit. Get the stock count right and the rest of the return falls into place.
As a sole trader you pay Income Tax on profit, which is your sales income minus allowable costs (including the cost of materials used in sold pieces). For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% to GBP 50,270, 40% to GBP 125,140 and 45% above, with the personal allowance tapering away between GBP 100,000 and GBP 125,140 to create an effective 60% band. Class 4 National Insurance is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, with Class 2 NIC settled through Self Assessment.
Scottish jewellers pay Scottish Income Tax through six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) and carry an S-prefixed tax code, while National Insurance stays UK-wide. Welsh makers have a C-coded tax code at rates currently matching the rest of the UK. If your code looks wrong, perhaps because a part-time PAYE job or a shop role is distorting it, run it through the tax code checker.
Plenty of makers start by selling a few rings on Etsy or at a local craft fair before it becomes a business. The GBP 1,000 trading allowance is built for exactly that. If your gross sales from making and selling jewellery are GBP 1,000 or less in a tax year, the income is tax-free and you do not need to register for Self Assessment. Cross GBP 1,000 of sales and you must register and report the full amount, even if your profit after materials is tiny.
Once over the threshold you choose each year. You can deduct the flat GBP 1,000 trading allowance instead of working out actual costs, or you can deduct your real allowable expenses if they come to more than GBP 1,000. For a jeweller, real costs almost always win because silver, stones, tools and stall fees add up fast, but the allowance is a useful fallback in a very low-cost starter year. If jewellery sits alongside a day job, our guide to side-hustle income explains how the two interact.
This is where jewellery differs from almost every other creative trade. Precious metal, gemstones, findings and wire are trading stock, and you only get tax relief on the materials that go into pieces you have sold during the year. Anything unused on the bench, plus finished pieces sitting unsold in your display case at the year end, is closing stock and carries forward to next year.
In practice this means a running count. Note what metal and stones you buy, roughly what goes into each sold piece, and what is left at year end. A jeweller who buys GBP 6,000 of silver and stones but only GBP 3,800 of it ends up in sold work deducts GBP 3,800 this year and carries the GBP 2,200 of remaining stock forward. Scrap, filings and lemel are worth recording too, because reclaimed precious metal has value and refiners often pay for it, which is taxable income.
An expense is allowable when incurred wholly and exclusively for the business. For a bench jeweller the list splits into materials (handled as stock above), capital equipment, and ordinary running costs.
| Expense | What qualifies | Notes |
|---|---|---|
| Precious metals and stones | Silver, gold, platinum, gemstones, pearls, findings, wire, solder | Treated as stock; relieved when the piece sells |
| Bench tools and equipment | Soldering torch, rolling mill, polishing motor, draw plate, hammers, pliers, files, ring mandrel, loupe | Usually claimed in full via the Annual Investment Allowance |
| Larger machinery | Laser welder, casting kit, ultrasonic cleaner, kiln, engraving machine | Capital items, also typically AIA in full |
| Hallmarking and assay | Assay Office fees, registered maker's mark, sponsor's mark | Ordinary running cost, fully deductible |
| Safety equipment | Goggles, fume extractor, fire blanket, gloves, dust mask, first-aid kit | Genuine PPE and safety gear is allowable |
| Home-workshop costs | Flat-rate working-from-home allowance, or a fair share of heat, light, power and rent | Bench-heavy power use often favours the actual-cost method |
| Insurance | Cover for stock, tools and public/product liability | Stock cover matters with metal on site |
| Selling and platform fees | Etsy, Folksy and marketplace fees, payment processing, craft-fair stall fees | Fully deductible costs of sale |
| Marketing and photography | Product photography, website, business cards, packaging and gift boxes | Allowable promotional spend |
| Training and CPD | Courses developing existing skills (stone setting, enamelling) | Training into a brand-new trade is not allowable |
| Accountancy and bank fees | Bookkeeping, Self Assessment, business banking | Fully deductible |
Most makers work from a spare room, garage or garden studio, so workshop running costs are a real deduction. You can use HMRC's simplified flat rate based on hours worked at home, which needs no receipts, or claim an actual proportion of household costs (heat, light, electricity, and a share of rent or mortgage interest) based on the space used and time spent. Bench work is power-hungry: torches, a polishing motor, a kiln or a laser welder pull serious electricity, so a jeweller often gets a noticeably larger deduction from the actual-cost method than a desk-based freelancer would. Work it out both ways once and use the larger.
If you drive to craft fairs, to the Assay Office, to bullion dealers or to deliver commissions, you can claim either the HMRC simplified mileage rate (45p per mile for the first 10,000 business miles, then 25p) or an apportioned share of actual running costs. Ordinary commuting to a fixed workplace is not allowable, but travel to a one-off fair or a supplier visit is.
The private share of dual-use power, broadband and phone must be excluded. Everyday clothing is never allowable, even a smart outfit for a gallery launch, though genuine protective gear is. Jewellery you keep or wear yourself is not a business cost, and tools bought before you actually started trading are pre-trading expenditure, claimed once you begin rather than ignored.
Take a home-based maker selling through Etsy, two galleries and a handful of craft fairs, with GBP 42,000 of sales for the year.
Income: GBP 42,000 (online and gallery sales GBP 36,000, fairs GBP 5,000, scrap-metal reclaim GBP 1,000)
Allowable costs:
Taxable profit: GBP 42,000 minus GBP 20,600 = GBP 21,400
Income Tax: GBP 21,400 minus GBP 12,570 = GBP 8,830 at 20% = GBP 1,766
Class 4 NIC: GBP 8,830 at 6% = GBP 530
Total tax and NIC: GBP 2,296 for the year. Notice the gross sales (GBP 42,000) are well above what the jeweller actually takes home, which is exactly why the MTD threshold being measured on turnover matters. Run your own figures through the sole trader tax calculator, and if you also have a part-time PAYE job use the multiple-income calculator to see how the streams stack.
For a jeweller the danger is treating a kilo of silver like a deductible expense the day you buy it. Count your stock, relieve metal as it sells, and your profit figure will finally make sense.
You must register for VAT once taxable turnover exceeds GBP 90,000 in any rolling 12-month period. Many bench jewellers never reach it, but a maker doing high-value gold, diamond or bridal commissions can, and because the test is a rolling 12 months you should watch your trailing total, not just the tax year. Registration lets you reclaim VAT on metal, stones, tools and assay fees, which is meaningful when materials are a large slice of cost. The trade-off is that if you sell mainly to consumers, adding 20% to retail prices either squeezes your margin or pushes prices up. There are also special VAT schemes (such as the margin scheme for second-hand goods) that can apply if you buy and resell antique or pre-owned pieces, so take advice if that is part of your trade.
Alongside Income Tax you pay Class 4 NIC at 6% on profit above GBP 12,570 (2% above GBP 50,270), and Class 2 is dealt with through your Self Assessment. Once your tax bill passes GBP 1,000, HMRC also asks for payments on account: two advance instalments toward next year's bill due in January and July. A growing jewellery business can be caught out by the first January demand, which bundles the balancing payment with a payment on account, so set money aside through the year rather than scrambling in winter.
Making Tax Digital for Income Tax Self Assessment replaces the once-a-year return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income, not profit:
This is the rule that catches makers out. Because it tests turnover, a jeweller selling GBP 55,000 of work but keeping perhaps half of that after expensive materials is still inside the April 2026 band. Under MTD you keep digital records and send HMRC a quarterly summary using compatible software, then finalise the year. The upside is that recording each sale, each metal purchase and each stock count as you go makes the annual stock and cost-of-sales calculation far less painful. Our guide to MTD for sole traders walks through the quarterly rhythm in practice.
Deducting all material spend in the year you buy it. Metal and stones are stock; you relieve them as the finished piece sells, carrying unused materials forward as closing stock.
Forgetting scrap and lemel income. Reclaimed silver and gold filings sold to a refiner are taxable income, easy to overlook.
Underclaiming workshop power. Torches, kilns and polishing motors use real electricity, and the actual-cost home-workshop method often beats the flat rate for a bench jeweller.
Watching the tax year instead of the rolling 12 months for VAT. The GBP 90,000 threshold is a rolling test, so a strong run of bridal commissions can tip you over mid-year.
Assuming profit, not turnover, decides MTD. The April 2026 to 2028 thresholds are tested on gross sales, so high material costs will not keep you out if your turnover is high.
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