Tax Relief on Job Expenses: HMRC Rule Changes

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HMRC recognises that employees might use their own money to buy things for their job or generally consume expenditure whilst working and there are tax reliefs in place for these types of expenditure, but are youa ware of the latest changes set out by HMRC? Read our latest article below to find out more..

Claiming expenses

The main categories of expenses which are recognised are: working from home, uniform, work clothing, tools, vehicles used for work, professional fees and subscriptions, travel and overnight stays and purchasing equipment.

Tax relief cannot be claimed if your employer reimburses your expenses or provides you with an alternative, for example, your employer provides tools or equipment, but you want to use a different make or model.

The working from home tax relief has become applicable to many more employees as a result of the coronavirus pandemic. Before the 2020-21 tax year, this relief could only be claimed if an employer required the employee to work from home on a regular basis and could not be claimed if the employee chose to work from home. With many businesses closing their premises during lockdown in the 2020-21 tax year, of course, this choice was taken away from employees and therefore HMRC relaxed the rules on eligibility for the working from home tax relief. This allowed employees to claim the tax relief for 2020-21 and HMRC has confirmed that employees will also be able to claim for the 2021-22 tax year, even if they have only worked at home for one day as a result of the coronavirus restrictions.

Employees have a choice of claiming the £6 per week tax relief or claiming for the actual additional costs incurred from working at home. However, if an employee wishes to claim for actual costs, then evidence of these costs will need to be provided. The relief is based on the tax rate you pay, so if you pay basic rate tax at 20%, you will get £1.25 (20% of £6) per week back.

Another job-related tax relief which employees may not be aware of is that for professional fees and subscriptions. Where membership or subscription fees must be paid to allow you to do your job, for example, membership of a professional accountancy body who regulate the profession such as ACCA, CIMA or ICAEW, tax relief can be claimed on these fees.

However, as with all job-related tax reliefs, employees are not able to claim the relief if their employee pays it for them or reimburses them for it. HMRC also has a list of approved professional organisations, so if you have paid fees to an organisation which is not on the approved list then you will not be able to claim tax relief on that payment.

Although most employers will either arrange and pay for travel and subsistence where it takes place for work, or have reimbursement schemes in place, if your employer does not, you may be able to claim tax relief. You may be able to claim for money you have spent on:

  • public transport
  • overnight accommodation
  • subsistence (food and drink)
  • tolls or congestion charges
  • car parking charges
  • telephone or printing costs related to the business

Where you use your own vehicle for business HMRC has approved mileage rates you can claim back from your employer. For cars at 45p per mile for the first 10,000 miles and 25p per mile after that. For a motorcycle at 24p per mile and 20p per mile for bicycles. If your employer reimburses you for some mileage but at a lower mileage rate than HMRC's approved amounts, you can claim the difference as tax relief. If your employer provides you with a vehicle you cannot claim business mileage at these rates but can at the advisory fuel rates which can be found on gov.uk.

Questions? We can help!

Get in touch with us, let us help you! Our team of tax experts can offer business advice and help you maximise your tax efficiency. Contact our Director, Nick Bonnello, today on 0115 964 8860 or email him at nickb@rwbca.co.uk tofind out how we can help you across all areas of your business.

The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.  

Tags: Financial planning Taxation Tax advice Tax planning HMRC Self-employed Income Legislation

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