If you are an employee, you may spend your own money on things that are related to your job. Where this is the case, you may be able to claim tax relief.
What can I get tax relief for?
The rules are strict and relief is only available for expenses which are `wholly, necessarily and exclusively’ incurred for the purposes of the job. This is a hard test to meet, but HMRC will generally treat it as being met in relation to items that are incurred clearly for work purposes only, such as travel for business journeys and associated expenses such as hotel accommodation and parking. You can also claim tax relief for business calls on your home or mobile phone, professional fees and subscriptions which you are required to pay as a condition of your job, and expenses incurred as a result of working from home where you are required by your job to do so.
What if my employer reimburses me?
From 6 April 2016, a new statutory exemption means that if an employer reimburses an employee for expenses for which the employee would be able to claim tax relief, both parties can effectively ignore the reimbursement. The money reimbursed does not need to be declared to HMRC and the employee does not need to claim tax relief. Prior to 6 April 2016, this was only the case if a dispensation was in place. Otherwise the employee was taxed on the amount reimbursed and had to claim the associated tax relief.
How do I claim relief?
The mechanism for claiming relief depends on the amount of the claim. If the claim is for £2,500 or less and you don’t complete a self-assessment tax return (which may be the case if your only income is from your job), you can make the claim on form P87. Claims can be made online or post (see https://www.gov.uk/government/publications/income-tax-tax-relief-for-expenses-of-employment-p87).
If you complete a tax return, you can also make a claim in your return.
It is also possible to claim by phone if your expenses are less than £1,000 (or less than £2,500 where they relate to professional fees and subscriptions) and you have made a successful claim in a previous year.
Claims for relief for more than £2,500 must be made by completing a self-assessment tax return.
Effect to the claims is normally given via an adjustment to your tax code.
Please get in touch with us at Inform if you need further advice on claiming tax relief or for any other tax related matters.
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