If you are an employee and you incur certain business expenses yourself, that your employer does not reimburse, you might be able to get tax relief. This only applies to business expenses that relate to doing your job.
The tax relief works by taking off the amount of the expense from your employment income. This reduces your taxable income and the tax you have to pay. This is why they are sometimes called ‘tax deductible’ or ‘allowable’ expenses. You may have to make a claim in order to obtain this tax relief. Because the relief operates by reducing your taxable income, you can get no relief for these expenses if you are not a taxpayer (ie not paid any tax).
To be deductible from the earnings of an employment an expense must be incurred wholly and exclusively in the performance of the duties of the employment. The words “wholly” and “exclusively” prevent a deduction for expenditure that serves a dual purpose, a business purpose and a non-business purpose.
You can allow a deduction for the whole or part of a single expense that has a dual purpose in 2 circumstances:
Working From Home
These expenses would include costs of business phone call and gas/electric for the part of the home from which you work from.
You can claim tax relief if you have to work from home, for example because:
Under the simplified tax rate system, you can claim £6 a week from tax year 2020/21 on wards (previously £4 per week) and not require proof of exact costs.
If you want to submit an actual exact figure in your claim, you will need evidence such as receipts, bills or contracts
Uniform, Work Clothing & Tools
These expenses would relate to repair , replacement and maintenance costs associated with work clothing and tools.
You may be able to claim tax relief on the cost of:
Under the simplified tax rate system, you can claim a flat rate based on the industry or occupation you work in - a list of the fixed rates is provided on the HMRC website.
You could also submit actual expenses and need to provide receipts of the repair, replacement or cleaning costs being covered by your claim.
Own Vehicles Used For Work (Cars & Vans)
If you use your own vehicle or vehicles for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle. This would include fuel costs, MOT, road tax and repairs.
Mileage relief is given at 45p per mile on the first 10,000 business miles and 25p per mile aver and above that
A mileage log should be kept during the year of all business trips undertaken in your vehicle with details of dates, destinations and miles undertaken.
Company Vehicles Used For Work (Cars)
You can claim tax relief on the money you have spent on fuel and electricity (in the case of electric cars), for business trips in your company car. Keep records to show the actual cost of the fuel.
Professional Fees & Subscriptions
You can claim tax relief on:
You should keep records of what you have paid in terms of fees and subscriptions in the form of invoices for example.
Travel & Overnight Expenses
If you have to travel for your work you may be able to claim tax relief on the cost or money you’ve spent on food or overnight expenses including:
You should keep records in the form of reciepts in relation to the above.
You can claim tax relief on the full cost of substantial equipment, for example a computer, you have to buy to do your work.
You should keep records of this expense for claim purposes.
You will not be able to claim for:
Allowable Expenses Under £2,500
If you have tax-deductible work expenses which have not been reimbursed by your employer, and your allowable expenses are under £2,500, you can make a claim for tax relief using Form P87.
Allowable Expenses £2,500 or More
If your claim is for £2,500 or more, you will need to register for self assessment and complete a tax return (phone the self assessment helpline on 0300 200 3310).
You must claim within 4 years of the end of the tax year that you spent the money. This would mean that for the tax year 2022/23, you could claim for allowable expenses not reimbursed by your employer going back to tax year 2018/19.
Calculation Of Tax Relief
This is determined by the value of the non reimbursed allowable expense and the rate at which the claimant pays tax.
If you are a basic tax payer and have not had allowable expenses of £100 relating to professional subscriptions reimbursed by your employer, tax relief will be given to you at 20% of £100 which would equal £20.
Tax Relief On Current Tax Year Claims
If your claim is for the current tax year, HM Revenue and Customs (HMRC) will usually make any adjustments needed through your tax code.
Tax Relief On Previous Tax Year Claims
If your claim is for previous tax years, HMRC will either make adjustments through your tax code or give you a tax refund.