If your employed you should be asking yourself if you’re entitled to tax relief on your work expenses.
You might know people who are claiming tax relief for their work expenses but this doesn’t necessarily mean you will be owed one, but it’s definitely worth checking. You might incur expenses because of your job that you didn’t know tax relief could be claimed on.
Work expenses rules
Unfortunately, there are very specific and tightly controlled rules for tax relief on employees’ expenses. There are only two criteria within which you can make a claim;
- You, the employee, has to pay the expenses in order to do the job.
- The expense is only for and essential to the duties of your employment.
HMRC would expect that every employee in the same role would incur the same work expenses. They do not see it as possible that it could be one employee and not another if they are both in the same job.
If an expense is not reimbursed by an employer, it becomes increasingly difficult to argue that it is a necessary cost of the job.
Work expenses you can claim for
HMRC usually grant tax relief for the following work expenses;
- Subscriptions to professional bodies
- Cleaning your own uniform or protective clothing
- Using your own car for business journeys
- Cost of accommodation and subsistence
- Working from home – if your contract specifies that this is a requirement of your employment.
Fixed rate deductions tax relief
Some jobs have agreed ‘fixed rate’ tax deductions with HMRC. These cover things like uniforms and tools.
If your claim is for no more than £2,500 you make a claim through correspondence. If your expenses come to more than £2,500 then you need to submit a self assessment tax return.
Potential pitfalls of making a claim for work expenses
- Unscrupulous firms which use “big refunds” as their main selling point, are making their “big” money through false claims for items that are not tax allowable. This ends up with you being stuck with the original bill from HMRC, plus interest and penalties.
- Submitting a self assessment tax return is joining a process with its own rules. Some of these rules come with penalties. For example, the late submission of your tax return always results in a fine. If you do not want to make expenses claims through the self assessment tax return system any more, you must apply to HMRC and have yourself taken out of it. Otherwise you will continue to receive tax return demands and an ostrich approach to those can cost you £1,600 in non-refundable penalties plus an estimated tax demand.
Tony Shanks