Apprentice mechanics tax rebate guide

New to the Motor Vehicle Industry? Find out how to be tax efficient during your career with our motor industry and apprentice mechanic tax guide.

Congratulations, you’ve successfully jumped through a lot of hoops to secure your motor vehicle technician apprenticeship. What position are you aiming for; Office Manager, Accident Repair Centre Manager, Dealer Principle? Or do you intend to work for yourself as a mobile mechanic, perhaps have your own garage one day?

It’s great to be starting out in a solid industry with so many options. We want you to be as confident in your future tax position.

This means you need to understand what you can claim back so you don’t miss out because of an HMRC tax rebate deadline or you didn’t keep the right records like tool receipts.

And it’s not too complicated so don’t worry.

Right now, you just need to know the basics of what tax rebates your job entitles you to. This means that when you complete your qualifications and start your first job, you’ll have everything in place.

What are work expenses tax reliefs?

The government recognises that many different jobs require taxpayers to spend their own money on essential items (something you can’t do your job without). In order to soften this blow, they give tax relief on these ‘work expenses’.

This means that you can claim back relief on the cost of the item. The rate of tax relief you claim is the same as the highest rate of tax you pay. If you pay the Basic 20% income tax rate, your tax relief claim is for 20% of the total cost. If you are in the Higher Rate, this is 40%, the Additional rate, 45%.

What can I claim in the Motor Services Industry?

The work expenses tax relief rules apply to everyone who pays tax; employed and self employed. This is the tricky part. You need to look at the regulations and see how they apply to your situation in the motor services industry. There are some industry specific tax reliefs set up by HMRC (aka the tax office) in order to make the processing of common tax relief claims more efficient. The amounts are not set in stone and usually rise, by small increments, over time.

Here are the most common tax reliefs we successfully claim for our clients in the motor industry. And they work all across the sector, including Business Administrators, Sales Executives and Service Advisors, not just the mechanical, electronic and body part experts. It’s all about applying the regulations to your work situation.

Which ones do you think will be useful for the role you’re training for?

Tools and toolboxes

Whichever specialism of the Body Shop Technician, Parts Advisor or Service Technician role you are aiming for, you are already using tools. Often, you will buy your own tools and not get the money back from your employer. In these cases, you are entitled to reclaim tax relief on the cost of these tools.

There are two ways for mechanics and vehicle technicians to claim their work expenses and the one you choose depends on whether or not you have any receipts.

  • Tool Allowance: This is the one you need to claim if you do not have any receipts to prove your tool purchases. It is a ‘flat rate’ expense allowance specifically for those in the motor vehicle industry and it’s worth roughly £24 per financial year. It assumes that you have spent £120 on tools during the tax year and you are reclaiming 20% of this as tax relief. You do not need any evidence for this type of claim and it can be backdated for four tax years. After your first Tool Allowance claim, this can be automatically balanced through your tax code for all your subsequent working years.
  • Capital Allowance: You’re probably already thinking that you’ll definitely be spending more than £120 on tools, at least in your first few years. And you can make a tax relief claim for the actual amount you spend, BUT you must have proof of purchase. That means keeping all your tool provider activity reports and receipts. A capital allowance claim is paid at around 18% of your total outlay. There aren’t any time restrictions on when you must claim a capital allowance by, as long as you are still using the tool or piece of equipment and have proof of purchase.

Once you get an idea of how much you could be spending, use our free Tools Tax Back Calculator to see what we can help you save with a tax rebate.

IMI membership subscription fees

You may already have a student membership to the Institute of the Motoring Industry. Very wise, they’ve got such a great range of support materials for students and add a real stamp of authority to your professional status. When you qualify, your membership status changes accordingly and you’ll start paying IMI fees.

The good news is that this cost is tax deductible. This means that your IMI membership fee can be included in your tax rebate claim. The only time when this doesn’t apply to you, is if your employer pays your IMI membership fee for you.

Trade Union Membership

Each Trade Union and professional body (like the IMI) negotiate their own deal with HMRC about membership fees being tax deductible. So, if you decide to join a Trade Union, find out if you can claim tax relief on their fee.

Washing your uniform / protective clothing

HMRC has arranged another flat rate expense amount for your industry for the necessity of washing your own uniform which includes protective clothing. Your uniform allowance is worth £60 every year. The only time this wouldn’t apply, is if your employer provides laundry facilities.

Finance agreements

Loads of our clients buy high price pieces of equipment or multiple tools, from companies like MAC Tools and Snap On, using finance agreements. You are able to claim tax relief on the interest payments you make on these agreements. Just make sure that you that you keep all the paperwork.

There are other work expenses tax reliefs available that may apply to your situation. Like mileage if you end up being sent to work at a different site, and food and accommodation if you’re required to work away from home.

We look at your whole picture and help you start off as tax efficient as possible. You’ll be paying your fair share, and not a penny more.

Do you have to fill in separate forms for each tax relief?

No, you can submit one tax rebate claim that includes all of the tax reliefs and allowances you are entitled to. HMRC check the calculations, ask for supporting evidence if necessary and usually send one cheque covering the total amount you are owed.

How to claim a tax rebate as an apprentice mechanic

You can submit your tax rebate claim yourself and the GOV.UK website can be clear to understand.

Some forms are not difficult to follow and fill in however you cannot submit a capital allowances claim for tools with the evidence needed online. This means you have to submit the claim on a P87 or self assessment online or by post directly to the tax office.

It’s a really good idea to be thinking about this now because you can set up your own good habits, in terms of filing receipts, keeping a travel log and recording any other work things you pay for.

Right at the start of your career, you’ve got time to trial different software and filing systems, so you’ve worked out what’s right for you before you land your first job.

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