These Tax Deductible Expenses You Might Be Unwittingly Missing

By Author: R Johnson
Total Articles: 4
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In this ‘no-nonsense’ guide, we’ll help you understand what tax deductible expenses are, what kind of expenses are eligible for tax relief and what steps you can take to avail those benefits. Without further ado, let’s delve right into it.

Tax Deductible Expenses UK Explained
On certain kinds of expenses incurred while on the job, referred to as tax deductible expenses, you can claim tax relief on the amounts you have paid out. Now, this applies typically under two scenarios:

- You paid the said expenses yourself but were not reimbursed
- Your expenses were reimbursed by your employer but you were taxed on that reimbursement.

Therefore getting relief from deductible expenses on your income means that the tax amount you are typically charged on a specific item has been removed. Of course, this is not to be confused with getting an item at no charge at all.

Let’s take a very generic example – whether you are claiming expenses for lunch, claiming expenses for your limited company or claiming expenses for working away from home – you’re a basic taxpayer and you incur a business ...
... expense for £100. You can claim a £20 tax relief on this amount, because that’s 20% of the total you paid to get something for the workplace.

As a basic rule of thumb, however, you can only claim expenses on items and/ or services that you have purchases ‘exclusively’ in relation to what you do for a living. So, if you’ve bought machinery or a piece of equipment to improve operations and productivity, you can certainly claim tax relief on that, but not that super-expensive chair you bought just to feel extra comfortable.

In addition, you cannot claim expenses or tax relief if your employer has taken the liberty of paying back those expenses.

It is up to you to keep a check on what you’ve spent on (by holding on to receipts and such), and claim expenses within 4 years of the end of the tax year, during which you spent the money. Just so you know, the end of the tax year in the UK is April 5.

In What Ways Can You Claim Tax Relief On Deductible Expenses?
Depending on your circumstances, you may want to claim deductible expenses for capital gains tax, deductible expenses as a self-employed individual or deductible expenses on rental income – no matter what your circumstances may be, here are some ways through which you can claim tax deductible expenses in the UK:

Claim Tax Deductible Expenses Through a Paye Scheme
By contacting HMRC, you may be able to get your tax code adjusted so that you end up paying slightly less income tax through PAYE. What this does is, it entitles you to a larger take-home salary figure and as a result, your expenses are paid back in increments.

However, in order to qualify for a PAYE (pay as you earn) scheme, you must fulfil the following criteria:
- Pay tax through PAYE only
- Avoid filling out a self-assessment form
- Owe less than £2,500 to your creditors

To find relief on tax deductible expenses through PAYE, you must apply online and set up your Government gateway credentials. You can also print and post a form P87 or phone HMRC directly if you’ve made a claim in the past.

Claim tax deductible expenses through a self-assessment tax return
If the nature of your income or line of work requires you to complete a self-assessment tax return form, then you can use this to claim tax relief on deductible expenses. In fact, you should use a self-assessment tax return if the relief you’re claiming is more than £2,500.

Our friendly accounting and tax experts at R Johnson can help you file a self-assessment tax return in a simple and hassle-free way.

Claim tax deductible expenses through business travel reimbursement
As long as you use your own car or a company-owned car to commute to work, you can claim relief on the mileage that hasn’t been reimbursed to you yet. However, this must remain in line with the mileage allowance approved by HMRC.

If you have been reimbursed for less than this, i.e. the total mileage allowance specified by HMRC, you can claim relief on the difference between the HMRC rate and what your employer has already paid. With that said, you can’t claim any tax deductible relief on mileage which was utilised while travelling between your home and your everyday workplace. However, you may be able to claim expenses on mileage pertaining to a temporary workplace.

Just so you know, you can claim 45pence for each mile on the first 10,000 miles and 25 pence for each mile on distances equivalent to 10,000 miles and higher – as per the mileage allowance specified by HMRC.

Claim Tax Deductible Expenses on Business Trips
In this case, you can claim reasonable deductible expenses which you incurred during a business trip. This may include:
- Food and drink
- Nightly stays
- Parking fees
- Congestion charges and tolls
- Work/business uniform and equipment
- Public transport expenses
- Costs for calls, fax and photocopying

It’s important to note that if your employer has reimbursed any or all of the above, you can only claim relief on them if the reimbursement was indeed taxed.

Claim Tax Deductible Expenses on Business Attire or Uniform
While you can’t make claims on the initial cost of buying a business uniform, you can certainly claim tax relief on the cleaning, upkeep or replacement of any protective clothing and/or uniform that you must wear while on the job.

The HMRC has allowed workers in certain lines of work to claim tax deductible expenses at a flat-rate allowance. The current list of occupations include builders, agricultural workers, police officers, NHS staff, fire fighters, prison staff, airline pilots including cabin crew, and more. Here’s a complete list of occupations as specified by HMRC.

You can also make deductible expenses claims on what you’ve already spent; that is, if it’s higher than the flat-rate, but you’ll need to provide proof such as receipts.

If your occupation isn’t listed, you may claim a fixed annual tax relief amount of £60. So, for example, if your basic pay tax rate is 20%, you can claim £12 in tax relief against the total £60 flat rate deduction.

Claim Tax Deductible Expenses on Membership Fees
For some professional bodies in the UK, fees and subscription deductible expenses on tax relief are eligible, only if a certain membership is mandatory in order to help you do your job. All such jobs requiring specific memberships must be on the list provided by HMRC.

Just to give you a quick example, you cannot claim membership or subscription fee expenses on:
- Fees and/or subscriptions you have not paid for yourself (i.e. your employer paid for them)
- Any lifetime membership subscriptions which are not relevant to or tie in with your job

Claim Tax Deductible Expenses for Self-Employed UK
You may be able to get tax relief on certain expenses as a result of working remotely as a self-employed individual. This includes lighting, heating and telephone costs. However, keep in mind that you can make claims on deductible expenses only on things that are directly tied to your work, such as the above, and not those that tie in to both work and personal activities – like broadband access.

For any claims made on deductible expenses for self-employed over £4 per week or £18 per month, you must provide evidence of the money you have spent. It should also be noted that if you are working from home on a voluntary basis, then you can’t make any tax claims on the money you’ve spent – even if that money has to solely do with work-related expenses and nothing else.

With that said, your employer might decide to contribute to your expenses, even though there is no legal obligation on them to do so.

This very same rule applies to the amount of tax relief you get. For example, if your employer is willing to contribute up to £4 per week / £18 per month towards your expenses, there’s no need to provide proof or receipts of the spending. But if the weekly or monthly amount is higher than this, then you must provide proof of what you want to claim tax relief on.

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