Which tax deductible expenses can you claim if you are employed?
The rules allowing you to claim tax relief on expenses connected with your employment are extremely restrictive. You are denied tax relief on almost all types of expenses that are not ultimately paid by your employer.
This is because, as an employee, you must show that any expenditure is incurred wholly, exclusively, and necessarily in performing the duties of your employment.
If your employer will not pay the bill for the expenditure involved, then HMRC takes the view that it was incurred as a matter of choice rather than necessity.
Nevertheless, some business expenses paid personally are deductible from your income and should be claimed on your tax return.
Tax Saver
Annual subscription to a professional body
Business use of your own car and telephone
Travel and overnight expenses
Clothing and upkeep of tools: HMRC and the trade unions have agreed to a flat-rate allowance for the upkeep of tools and special clothing in most classes of industry. As an alternative, you can claim a deduction for the actual amounts spent on these items
Payment by directors or employees for work-related insurance coverage. Tax relief is also allowed if you have to pay for uninsured liabilities.
The cost of most expenses you incur in your work is ultimately met by your employer, who either reimburses you through an expense claim or pays for them directly.
There are several tax-free non-financial benefits for employees:
Free or subsidised meals in a staff canteen, provided the facilities can be used by all staff.
Sporting and recreational facilities.
Staff parties, providing the annual cost to the employer is no more than £150 per head.
Long service awards of at least 20 years.
Gifts not exceeding £250 in the year to an employee from a 3rd party by reason for his or her employment.
One routine health check and one medical screening each year.
Eye tests and corrective glasses if your employer is required, by law, to provide eye and eyesight tests for you because of the work you do.
Up to £500 each year for recommended medical treatment, so you can get back to work.
Work-related training expenses include fees, travel, subsistence and the cost of any books.
Payment not exceeding £500 in a tax year by your employer for pension advice.
Computers and other office equipment are loaned to employees for business use only.
One mobile telephone per employee for private use.
Childcare facilities at the workplace or elsewhere (but not on domestic premises).
Employer-supported childcare facilities of up to £55 a week.
Up to £6 per week for working from home, or you can claim actual expenses, which will be lights/heating, telephone, water and office space.
Accommodation and subsistence expenses when your duties require you to travel abroad.
Personal incidental expenses when you stay away from home overnight on business (tax-free limit of £5 per night in the UK and £10 elsewhere).
Bicycle and cycling safety equipment are made available to employees mainly to get them between home and work.
The cost of taxi fare when you have been working late or when public transport is not available.
The cost of electricity provided in workplace charging points for electric or plug-in hybrid cars and vans owned by employees.
Mileage allowance where employees use their car, van, motorcycle or pedal cycle on business (45p per mile for the first 10,000 and 0.25p over that, motorcycles = 0.24 per mile and 20p per mile for bicycles).
If your head is now spinning having read this far, never fear! Reach out to us if you are unsure whether or not you should be claiming for business-related expenses as an employee and we’ll guide you in the right direction.