Navigating the world of allowable expenses for employees in the UK can be a complex task. This guide aims to provide a thorough understanding of the various expenses employees can claim, helping you save on taxes and ensure you’re reimbursed for work-related costs. Keep in mind that this is only a guide, and the rules surrounding employee expense claims can be intricate. Always consult HMRC guidance and seek professional advice if needed.
One of the most common expenses employees can claim is travel costs related to work. This includes:
If you use your car, van, motorcycle, or bicycle for work purposes (excluding commuting), you can claim mileage at the approved rates set by HMRC. For cars and vans, the rates are 45p per mile for the first 10,000 miles and 25p per mile thereafter. For motorcycles, the rate is 24p per mile, and for bicycles, it’s 20p per mile.
Costs for train, bus, and taxi fares can also be claimed if they’re incurred for work-related travel.
Parking fees and tolls
Any fees for parking or tolls incurred during work-related travel can be claimed.
If you’re required to stay overnight for work purposes, you can claim the cost of accommodation, provided it’s reasonable.
When traveling for work or attending business meetings away from your usual office, you may incur meal costs. HMRC allows employees to claim for reasonable meal expenses, known as subsistence. There are no specific rates, but the expenses must be justifiable and not excessive.
Uniform and Workwear
If your job requires you to wear a uniform, protective clothing, or specific workwear, you can claim the cost of purchasing, maintaining, cleaning, and replacing these items. Note that this doesn’t apply to everyday clothing worn to work.
Professional Fees and Subscriptions
Employees can claim the cost of annual subscriptions or membership fees for professional organizations or trade unions if their membership is required or beneficial for their job.
Home Office Expenses
If your employer requires you to work from home, you can claim expenses related to your home office. This includes:
- Additional heating and lighting costs
- A portion of your rent, mortgage interest, council tax, or water rates, based on the size of your workspace
- A proportion of your internet costs for work-related use
- A simplified flat rate of £6 per week, which covers additional home office utility costs without the need for detailed calculations
Work-related training courses that enhance your job skills and knowledge can be claimed as an expense. However, this doesn’t apply to training courses that prepare you for a new job or role.
Business Phone Calls and Internet
If you use your personal phone for work-related calls or your personal internet connection for work purposes, you can claim the costs associated with those calls and a proportion of your internet costs.
Tools and Equipment
Employees can claim for the cost of tools and equipment purchased for work purposes, as well as the cost of repairing or replacing them.
Understanding and claiming allowable expenses can save you money on taxes and reimburse you for work-related costs. However, the rules surrounding these claims can be complicated. Always consult HMRC guidance and seek professional advice to ensure your claims are accurate and valid. Keep accurate records of your expenses, including receipts and invoices, as HMRC may request evidence to support your claims. Remember that each individual’s situation may vary, and this guide is not exhaustive.
Additional Tips for Claiming Expenses:
1. Keep Organized Records: To make the process of claiming expenses smoother, maintain organized records of all your work-related expenses. This includes retaining receipts, invoices, and mileage logs. Store them in a safe place, as you may need to provide them if HMRC requests evidence.
2. Be Aware of Deadlines: When submitting your tax return, ensure you’re aware of the deadlines. Late submissions can result in penalties. For most employees, the deadline for submitting a tax return online is January 31st following the end of the tax year (April 5th).
3. Understand What’s Not Allowable: Some expenses cannot be claimed, such as everyday clothing, commuting costs, and costs related to entertaining clients. Familiarize yourself with expenses that are not allowable to avoid issues with your tax return.
4. Seek Professional Advice: If you’re unsure about any aspect of employee expense claims, consider seeking advice from a professional, such as an accountant or tax advisor. They can provide guidance tailored to your specific situation.
5. Check Your Employer’s Expense Policy: Before making any claims, review your employer’s expense policy to ensure you’re following their guidelines. Some employers may have specific rules or limits regarding allowable expenses and reimbursements.
By staying informed about employee expense claims in the UK and following best practices, you can maximize your tax savings and ensure you’re reimbursed for necessary work-related costs. Remember to always consult HMRC guidance and seek professional advice when needed.