Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust. Or you can check out our online calculator to see if you could be due a refund.
What is tax relief?
If you are left with any out of pocket expenses from your job, you might be able to claim these expenses back as tax relief. So, if you have to pay for your own business travel or to buy tools and equipment required for you to do your job, you can claim these costs back to lower your tax bill. You must have paid tax during the year in which you want to claim the tax relief. How much you claim depends on how much tax you pay. So, for example, if you have spent £100 out of your own pocket on work-related expenses and you pay tax at 20%, you can claim back £20 as tax relief.
You can only claim for expenses which are solely work-related. If you bought an item of equipment that you are also going to use for personal purposes, you won’t be able to claim tax relief on that item. You can’t claim tax relief if you spend your own money buying something when your employer has already provided you with an adequate alternative.
You must keep records of what you spend and you need to claim your tax relief within 4 years of the end of the tax year in which you spent the money. If you have been reimbursed for your expenses by your employer, you can’t claim tax relief.
How do you claim tax relief?
How you claim depends on how much you are claiming.
For claims up to £2,500
If you are claiming tax relief for expenses up to £2,500, you claim by:
- Completing and sending your Self Assessment tax return, if you already need to send one
- Online or by posting HMRC form P87, if you don’t need to send a Self Assessment tax return
- By phone, if you have already had a successful tax relief claim in a previous tax year and your expenses are less than £1,000 (£2,500 if you are including professional fees or subscriptions).
For claims over £2,500
You can only claim tax relief for expenses over £2,500 through a Self Assessment tax return. If you don’t already send a tax return, you need to register for Self Assessment. Once you have registered, HMRC will write to tell you what you need to do next.
How do you receive your tax relief?
In the same way as claiming your tax relief, how you receive the tax relief depends on how much you are claiming.
For claims up to £2,500
If your claim is for £2,500 or less for the tax year, you will usually receive your tax relief through your tax code. HMRC will adjust your tax code so that you pay less tax in the current tax year. If your claim is based on estimates, HMRC will review your claim at the end of the tax year and will make any adjustments in the following tax year if necessary.
For claims over £2,500
If your claim is for more than £2,500, HMRC will apply the tax relief through your tax code for the current and next tax year. They will also send you a tax return to fill in. HMRC will also check your tax calculation for the previous tax year.
How do you get tax relief for uniforms, tools and work clothing?
You might be entitled to claim tax relief on the cost to you of the following:
- Cleaning, repairing or replacing specialist clothing, such as safety clothing or a work uniform
- Repairing or replacing small tools that you need to do your job.
You can’t claim tax relief for the initial cost of buying the work clothing or small tools.
If you are required to buy other equipment for your job, you might be able to use capital allowances to claim for these.
You can either claim for the actual cost to you (you will need receipts to back up your claim) or you can claim a ‘flat rate deduction’, which is a set amount agreed by HMRC. Flat rate deductions are usually set for different occupations – if your occupation isn’t listed, you can still claim a flat rate deduction of £60. If you are claiming a flat rate deduction, you don’t need to keep receipts.
How do you get tax relief for business mileage, fuel or electricity costs?
If you use fuel or electricity for business purposes, you might be able to claim tax relief on this. How much you claim depends on whether you are using your own vehicle or a company vehicle. You can’t claim mileage for your normal commute to and from your usual place of work but you can claim if you are asked to work from a temporary workplace.
If you use your own vehicle, you might be able to claim ‘Mileage Allowance Relief’. To claim this, you need to add up your business mileage for the tax year and multiply it by the approved mileage rates. If your employer pays you a mileage allowance but it is less than these approved mileage rates, you can claim tax relief on the difference. However, if your employer pays you more than the approved amounts, you will have to pay tax on the difference. You need to keep good records of the dates and distances of your business journeys.
If you use more than one vehicle, you can combine your business miles as long as the vehicle is of the same type (for example, all of the journeys are made in a car). If you use different kinds of vehicle, you will have to work them out separately because the mileage rates are different.
If you use a company car, you can claim tax relief on the money you have spent on fuel or electricity. You need to keep records to show how much you have actually spent on the fuel.
How do you claim tax relief on travel and overnight expenses?
If your job includes travel and overnight stays, you might be able to claim tax relief on the money you have spent on food and other expenses related to overnight stays. You can’t claim these costs of they are related to your usual place of work but if they are related to a temporary place of work, you can claim these costs as tax relief.
These expenses can include:
- Hotel costs
- Public transport costs
- Food and drink costs
- Parking costs
- Any congestion fees or toll charges you might have to pay as a result of this travel
- Business costs, such as the cost of phone calls, or charges to use fax machines or photocopiers
As already mentioned, you may also be able to claim your business mileage as tax relief.
Can you claim for professional fees and subscriptions?
Yes, if you are paying fees or subscription charges to an approved professional organisation, you can claim these fees as tax relief – as long as the professional fees or subscriptions are necessary or useful to do your job.
If the fees are to a professional body which is not approved by HMRC, you won’t be able to claim these costs back. You also won’t be able to claim back the costs of lifetime memberships or fees and subscriptions that were paid by someone other than yourself, for example, if your employer paid the fees.
The professional organisation you belong to can tell you how much you are entitled to claim in tax relief. You can find out which professional organisations are approved by checking out the HMRC website.
Can you claim tax relief if you work from home?
If you have to work from home on a regular basis, you might be able to claim tax relief on the cost to you of working from home. However, you can only claim for things which are relevant to your work and not for things which you use for both business and private use. This means that you could claim tax relief on the gas or electricity it costs to heat your work area or for business phone calls, but HMRC won’t let you claim for your broadband access or your mortgage.
If you are claiming tax relief of £4 per week (£18 per month), you don’t need to keep business records. If you want to claim more than that, HMRC will want to see proof of your costs.
If you are working from home as part of a voluntary agreement with your employer, such as under a ‘homeworking agreement’, your employer may contribute to your costs but they don’t have to. If this contribution is up to £4 per week (or £18 per month), you don’t have to provide any receipts to HMRC. But again, if they contribute more than that, you will need to provide proof of your costs to claim additional tax relief. You won’t pay any additional Income Tax or National Insurance on these contributions from your employer. If your employer doesn’t contribute to your expenses, you can’t claim tax relief if you are working from home voluntarily.
What if you buy equipment to do your job?
If you have to buy any substantial piece of equipment to do your job, HMRC will usually allow you to claim the full cost as tax relief. This is because it qualifies for annual investment allowance, which is a type of capital allowance.
If the item is unlikely to last for more than 2 years, you have to apply for tax relief in a different way. This will apply to such expenses as tools or uniforms.
Capital allowances can’t be claimed for vehicles (cars, motorcycles or bicycles) you use for work although you might be able to claim tax relief on your business mileage and fuel costs.
If your employer gives you any money towards the item, you will need to reduce your tax relief claim by that amount.
How can DSR Tax Claims help?
We aim to make life as simple as possible for our clients and that includes giving you the information you need to make your taxes (and your life) simpler and less stressful. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax rebate. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.