How you could improve tax efficiency by claiming work-related expenses

Have you considered claiming tax relief on work expenses? It could reduce your tax bill and help your money go further. Read on to find out if you could receive tax relief and how to make a claim. 

The rules about what you can claim tax relief on are strict, but it’s worth checking if you could be eligible.

You could make a claim if you use your own money to buy goods or services that are necessary for your job. You must only use these purchases for work unless you can calculate the proportion of use for private and work purposes, which may be complex. You cannot claim tax relief if your employer reimburses costs. 

Potential claims will depend on your role and industry. Common claims include the cost of:

  • Cleaning, replacing, or repairing a uniform or specialist work-related clothing
  • Repairing or replacing small tools
  • Professional subscriptions or fees
  • Work-related travel that is not your regular commute
  • Mileage if you use your private vehicle for work.

If you work from home, you may also be able to claim tax relief on the additional expenses you incur, such as increased utility bills. However, you will usually be “required” to work from home, rather than choosing to do so, to successfully make a claim. 

The tax relief you receive will depend on your Income Tax bracket

To claim work-related expenses, you must have paid Income Tax in the tax year you’re claiming for. 

HMRC will use your Income Tax bracket to calculate the amount of tax relief you’re entitled to. For example, if you’re a basic-rate taxpayer and make a purchase for £60, you’d be entitled to claim £12 tax relief as your Income Tax rate is 20%. If you’re a higher-rate taxpayer, in the same scenario, you could claim £24 in tax relief as your Income Tax rate is 40%. 

When you make a successful claim, HMRC will usually adjust your tax code, so you’ll pay less Income Tax. You can make claims for the last four tax years. 

If you intend to claim tax relief for work-related expenses, it’s often a good idea to keep records of your spending. 

How to claim tax relief for work-related expenses 

To receive the tax relief you’re entitled to, you’ll need to send a claim to HMRC. It is usually straightforward. 

If you already complete a tax return, you can include work-related expenses as part of your submission.

For workers that don’t complete a tax return, you can fill in a P87 form. You can do this online or submit a claim through the post. If you want to make claims for multiple tax years, you’ll need to complete a separate form for each year.  

You will need to provide your personal details and those of your employer to complete the form. You should then list each expense you’d like to claim relief on.

If you want support, there are specialist tax refund companies. However, they will take a fee from any repayment you receive and, depending on the agreement, could be entitled to other tax returns you receive as well.

There have been cases of scammers targeting victims by claiming they can assist in completing tax relief forms. So, make sure you check the firm is legitimate and carefully read what you’re agreeing to before providing any personal details or signing paperwork, including digital documents. 

Contact us to talk about making your finances tax-efficient 

Claiming work-related tax relief could help make your finances more tax-efficient. There may be other steps you could take to improve tax efficiency too, such as:

  • Using an ISA to save or invest
  • Contributing to a pension to invest for your retirement
  • Making use of the Marriage Allowance to reduce your Income Tax bill
  • Using exemptions to reduce tax when you make a profit selling assets.

As part of a wider financial plan, we could help you understand which tax allowances make sense for your circumstances and goals. Reducing your overall tax bill may help you get more out of your money.

Please contact us to arrange a meeting. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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