Claiming tax relief on employment expenses
You can claim business expenses incurred in carrying out your job, paid for personally, find out how?
How can you claim tax relief for expenses incurred to carry out your job?
You can claim tax relief:
- If you are purchasing items required for the job using your own money
- If you only use these items for carrying out your work
When are you not allowed to claim tax relief?
You cannot claim a tax relief:
- If your employer either reimburses you money that you spent on things required for work or
- If your employer provides you with other alternatives, for instance, you are handed over a laptop but is not of your choice
You will only be able to enjoy tax relief on the expenses incurred if you have paid you tax in that given tax year. Your tax relief will depend on the rate at which you have paid tax and the amount that you have spent.
For instance, if your expenses amount to £60 and you have paid tax at a rate of 20% for that tax year, you can claim tax relief of £12 which is 20% of £60.
For some claims, you might be required to collect and save records of the costs incurred and the amount spent. You are also required to file a claim within a timeframe of 4 years after the end of the tax year in which you have spent the money.
HMRC will amend any discrepancies through your tax code if you want to claim tax relief for the current year.
HMRC will amend any discrepancies either through your tax code or by making a tax refund if you want to claim tax relief for the past three years.
What about the expenses incurred on a uniform, work clothing and tools?
You are allowed to claim tax relief:
- On the cost incurred to repair or replace a specific tool required for your work (for instance, a drill machine, scissors, hammers etc.)
- On the cost incurred to clean, repair or replace specialist clothing (for instance, safety boots, protected goggles or uniform)
You are not allowed to claim tax relief on the initial cost incurred to buy clothing or small tools required for work.
How much can you claim?
You are entitled to claim:
- Either the actual amount of money that has been spent. You need to ensure that you keep receipts to make the claim
2. A fixed amount that has been agreed (a flat rate expense or flat rate deduction)
You need to say if your work has an agreed flat rate expense
What about the vehicles you use for work?
You are allowed to claim tax relief on vehicles, motorcycles or bicycles that you use to complete your work-related tasks.
The expenses incurred to travel to and from your work are not included. However, you may claim them if its a temporary place of work.
The amount of tax relief that can be claimed depends entirely upon:
- Whether the vehicle you are using has been purchased or leased from your own money
- Whether the vehicle you are using is owned or leased by your employer
What if you are using your personal vehicle for work?
If you are using your personal vehicle for work-related purposes, then you can claim relief at the approved mileage rate. This includes the cost incurred for owning and running your vehicle. You do not need to claim separately for various things like:
- Road tax
To estimate the amount of tax relief you can claim, you must ensure that:
- You store records of the date and mileage of your work journeys.
- You sum up the mileage for each type of vehicle you have used for work purposes.
- You take away any amount of money that your employer pays you to cover travel costs. This is sometimes known as ‘mileage allowance’.
What are the approved mileage rates?
The table below shows you the approved mileage rates:
|Vehicle type||First 10000 miles for work purposes in the tax year (%)||Each work-related mile over 10000 in the tax year (%)|
Cars and vans
What if you are using a company car for work?
You are allowed to claim tax relief on any expenses incurred to cover fuel, or electricity costs if using an electric car, whilst on a business trip in your company car. You are required to keep receipts to show the actual cost of the fuel.
If your employer pays some of the money back to you, then you can claim tax relief on the remaining difference.
What about your travelling and overnight expenses?
You can claim tax relief on the expenses incurred on food or overnight expenses if you are travelling for job-related purposes.
Your expenses incurred from your travelling to and from your work are not included. However, you may claim if its a temporary place of work.
You are only allowed to claim tax relief on expenses incurred on things like:
- Hotel accommodation charges (if you stay overnight)
- Food and beverages
- Public transport costs
- Toll and congestion charges
- Parking fees
- Printing costs
- Business-related phone calls
- Business mileage
What about professional fees and subscription?
You can claim tax relief on fees and subscription fee that you pay to approved professional organizations, given that you have a membership that is related to your employment.
However, you are not allowed to claim tax relief on professional fees or subscription fee that you pay for:
- Life membership subscriptions
- Fees or subscription fees that have not been paid by you (for instance, your employer has paid for your subscription)
Your organization can inform you about the amount of taxes you can reclaim.
What if you are working at home?
You can claim tax relief on any bills you pay to work from home on a regular basis if this is the only option available. However, you may be barred to claim tax relief if you choose to work from home and not working from home due to necessity.
You are only allowed to claim relief on things that are related to your work, for instance, the cost of electricity and gas or your business-related phone calls.
You are not allowed to claim relief on things that are used for private and business purposes both. This may include your home rent or broadband access.
You can receive up to £ 4 per week (18 per month) from your employer to cover additional expenses if you are working from home. You are not required to store records for these transactions.
What if you work from home voluntarily?
You will not be able to claim any tax relief on the bills if you are working from home by choice or after an agreement with your employer.
What about buying other equipment?
You are able to claim tax reliefs on the cost incurred to purchase equipment but this equipment should be used for work-related purposes, for instance, a computer. Such equipment qualifies for an annual investment allowance, which is a type of capital allowance. Remember that capital allowance can’t be claimed on cars, motorcycles, bicycles etc. that may be used for work but business mileage and fuel costs can be claimed.
For any item that lasts for less than 2 years (for instance uniforms and tools), the procedure to make claims is quite different than normal.
What if your employer pays for the item?
You are able to deduct tax relief on the amount left after deducting what your employer has reimbursed you.
How to make a claim?
Claiming tax relief on expenses incurred personally for your job can be easy but can also get extremely complicated. Speak to a tax accountant, if you do not have one try hiring competitive tax accountants in London.
Clear House Accountants are specialist Accountants in London who have years of experience working with businesses as their trusted tax advisors. Our smart tax solutions help businesses save money by using effective tax planning strategies.
Thao is a Senior Accounting Manager at Clear House Accountants. Her experience in the industry has led her to her current position in which she is responsible for a team of accountants, tax planners and bookkeepers.
Thao works with her team to help clients from a variety of industries, grow, save money and plan for the future. Thao holds a Bachelor and Masters degree in Accounting and Finance and is currently working towards her ACCA, she is also a Xero and Quickbooks Certified Advisor.
Thao’s expertise lies in high-level tax planning, management accounting and strategic business planning based on financial performance and business analytics. Her experience, expertise and knowledge make her an exceptional contributor at Clear House.