Updated Employee Expenses

Employee expenses

If you have been employed for part of a tax year, or are continuing your employment alongside your sole trade business, it is important to check whether all of your employment-related business expenses have been reimbursed by your employer.

Many employers do not reimburse the full costs of business related expenses that have been incurred.

The list below covers common areas of valid business expenses but it is not exhaustive:

  • business mileage in your own vehicle
  • fuel costs for business journeys in a company vehicle
  • travel and overnight expenses
  • professional fees and subscriptions paid to approved bodies
  • repairing or replacing small tools
  • cleaning, repairing or replacing uniforms, protective clothing, or safety boots
  • flat rate expenses for certain occupations (see EIM23712)

HMRC have drawn attention to these claims recently in their latest Employer Bulletin. Please find the relevant information on page 7 of the below link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/607867/Employer_Bulletin_65_v4_Accessible.pdf.

Claims can be made as part of your tax return, via form P87 or through your own personal digital tax account.

Please be aware that HMRC is looking into some claims to check that all expenses claimed for are valid. This makes it important to keep records of any expenses incurred in case you are challenged by HMRC.

Tax deducted by banks

Since 6 April 2016 most banks, building societies and NS&I have paid interest without tax deducted.

For many, no tax liability will arise due to new legislation which provides that the first £1,000 of interest for basic rate tax payers, or £500 if you are a higher rate taxpayer attracts a 0% charge. Additional rate taxpayers are not entitled to the 0% tax rate.

If your current account is a “reward” account they may still deduct tax from the rewards and interest that you receive. This is because the reward part of your account is taxable income and is not paid gross.

Any cashback you receive on the other hand does not have to be declared. This is because cashback is not considered taxable income.

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