Tax Relief on Employment Expenses

Accounting reminders with Allchurch & Co

We wanted to clear up an area that some individuals that are employed don’t always understand or get the benefit of. We don’t blame you as when you have always been employed you haven’t had to worry about the tax you pay thanks to the PAYE system.

  • You might be able to claim tax relief if:
  • you use your own money for things that you must buy for your job
  • you only use these things for your work

You cannot claim tax relief if your employer either gives you:

  • all the money back
  • an alternative, for example your employer gives you a laptop, but you want a different type or model

You must have paid tax in the year. You’ll get tax relief based on what you’ve spent and the rate at which you pay tax. For some claims, you must keep records of what you’ve spent. You must claim within 4 years of the end of the tax year that you spent the money. If your claim is for the current tax year, HM Revenue and Customs (HMRC) will usually make any adjustments needed through your tax code. If your claim is for previous tax years, HMRC will either make adjustments through your tax code or give you a tax refund.

We have set out some of the costs you could claim for, this list is not exhaustive;

Mileage – If the mileage allowance that your employer pays you is less than the HMRC rate, you are able to claim the balance. The first 10,000 business miles, according to HMRC, can be claimed at a rate of 45p per mile. Over 10,000 miles the allowable HMRC rate drops to 25p per mile. If you are paid less than these rates by your employer, you can claim the difference on yourself assessment return. You can’t claim for travelling to where you work, unless it’s a temporary place of work.

Working from home – If you are required to work from home by your employer or have a home working agreement in place with them, you are entitled to claim a home working allowance. This is to help with increased household costs because of business use, such as electricity, gas, phone. The amount you can claim at present is £4 a week.

Charitable contributions – If you are a higher rate taxpayer and have made gift aided charitable donations, you can claim tax relief on them. For example, if you donated £200 to charity, the total donation would be £250, so you can claim back £50 if you pay tax at 40%.

Clothing and Tools – If you work in certain industries, such as the building/metal working industries, you may have to use uniforms, specialist or protective clothing, gloves, etc. You can claim tax relief on the maintenance/ cleaning/replacement of these items, but you can’t claim for the initial cost of buying the items. That is, of course, as long as your employer does not already compensate you for these costs.

Professional fees and subscriptions – You can claim tax relief on professional fees, membership fees, subscriptions, etc. if they are necessary or beneficial for your work. To be entitled to the relief the organisation subscribed to must be on the HMRC approved list.

Capital Allowances – If you have to buy equipment for work, that your employer does not pay for, you may be able to claim capital allowance tax relief. The example HMRC gives is of a filing cabinet purchased by an employee for work, but not paid for by the employer.

You cannot claim relief for motor vehicles. These are dealt with on a different part of your tax return.

Overnight expenses – If you have to travel for your work you may be able to claim tax relief on the food or overnight expenses, called ‘subsistence’. For example, hotel accommodation if you have to stay over-night, business phone calls, parking fees and tolls.

(Please note the information in our articles is for information purposes only. If you would like to discuss anything further, then please don’t hesitate to get in touch).

Allchurch & Co. Chartered Accountants. / 07825 232218


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