Can I claim tax relief for employee expenses?
If you incur expenses in relation to your employment and you are not reimbursed by your employer, then you may be able to claim tax relief on the costs incurred.
If your work-related expenses meet the relevant conditions, then they can be deducted from your income and therefore reduce your total taxable income and your liability to tax.
In general, work-related expenses can only be deducted from your income if they are incurred “wholly, exclusively and necessarily” in the performance of the duties of employment.
In the UK, the Courts have traditionally taken a very restrictive approach in what expenses can be deducted for tax purposes. Therefore, unless an expense is incurred in actually carrying out the duties of your profession, then the expense will not be allowable. It is not sufficient for the expense to be relevant to your job, or that the expense puts you in a position to perform your duties of employment.
If the nature of your employment means that you must wear a uniform (e.g. police officer, retail worker, etc.), protective clothing (e.g. steel toe cap boots) or specialist clothing, you may be able to claim tax relief on the amount that you pay if you need to replace, clean or repair these items.
Please note that you cannot claim relief when you buy these for the first time.
Furthermore, you cannot claim tax relief if your workwear is made up of ordinary clothing not mentioned above (e.g. office wear).
Costs related to travel can also be deducted from income if the travel is an essential part of your job, e.g. client meetings. This could include the cost of tickets for public transport, accommodation, food and drink, parking, tolls and congestion charges.
However, this tax relief does not apply to the travel costs for your normal commute to work (between your home and your permanent workplace) or for travel during your free time.
Using vehicles for work purposes
If you have your own car, van, motorcycle, or bicycle that you use for work-related tasks, you may be able to receive tax relief on the costs related to owning and running the vehicle(s).
You can do this by using the HMRC approved mileage rates.
You will need to record the details of your journeys, including the dates and the mileage. You can then use these details and the approved mileage rates to calculate the mileage allowance you can claim for that tax year.
Any contributions that your employer pays towards this should be deducted.
Approved mileage rates
|Vehicle type||First 10,000 miles||Above 10,000 miles|
|Cars and vans||45p||25p|
If you use a company car, the money that you spend on fuel and electricity for business trips is eligible for tax relief.
It is important that you keep the receipts that show the exact cost.
Again, any contributions towards this from your employer should be deducted.
Working from home
If you are required to work from home, the costs that you pay in order to carry out your work are eligible for tax relief.
These include telephone bills for work-related calls and the extra electricity and gas that you use.
However, to claim this relief, it is essential that there is no option for you to work at your employer’s premises.
It is also not possible for you to claim relief on services that you use for both work and private use (e.g., the cost of broadband and rent).
Work-related equipment and tools
The cost of repairing or replacing essential small tools (e.g. pencils, pens, small drills, etc.) with an expected lifespan of less than 2 years will likely qualify for relief.
Equipment with an expected lifespan of more than 2 years (e.g a computer/laptop) will also likely qualify for 100% relief under the Annual Investment Allowance, provided that expenditure does not exceed the £200,000 p/a limit (2018/19 rates).
However, please note that relief will not be available where your employer would have provided the equipment, but you choose to provide it yourself instead.
Professional fees and subscriptions
Any costs related to professional fees or subscriptions to professional organisations can also be a deductible expense for employees. This is applicable if you are currently working within that profession and it is compulsory for you to have membership in order to carry out your work (e.g., health professionals and teachers).
How to make a claim
If you believe that you should be able to claim tax relief on your employment expenses, it is important that you maintain a record of the exact amount of money that you spend. You must keep the receipts for your purchases as proof. You must keep these receipts until at least the 31st January after the year of assessment.
There are two methods for claiming expenses:
- If your expenses are below £2,500 and you have never submitted a tax return, you can claim tax relief online using HMRC’s Government Gateway service.
- If your expenses are £2,500 or more and/or you have previously submitted tax returns, then you must submit a tax return in order to claim the relief.
You have four years after the end of the tax year from when you incurred the expense to make your claim.
If you have any questions, or require any advice or assistance in relation to deducting work-related expenses from your income, please contact a member of our team.
Sole Traders: Key dates, deductible expenses, and NICs (25 May 2017)
Keeping it in the Family: Alan Nicholson v HMRC (4 April 2018)