As accountants, we will help employees with completion and submission of their personal tax returns. HMRC is strict on expenses that can be deducted against employees income and as a result, reduce their tax bill.
However, they are a few areas that are worth explaining that may be of benefit to you as an employee.
You can claim expenses against your salary (employment income) where you have incurred expenses that are “wholly, exclusively and necessarily” in the performance of your employment duties.
In order to meet the ‘necessarily’ test, you need to show HMRC that you could not do your job without incurring the expense. This test is normally difficult to meet. However, specific expenses, under the legislation, are allowable as deductions.
Any travel expenses between your home and normal place of work are not allowable as a deduction against your salary since this is treated as ordinary commuting.
Your travel costs to a temporary workplace are allowable. This is a place where you attend in the performance of your duties for a limited period or you attend for some other temporary reason.
Your normal workplace is unlikely to be categorised as temporary, by HMRC, if you attend that location for more than 24 months. This will only apply if you spend more than 40% of your working hours there.
Where you incur travel costs for visiting customers and these travel costs are not reimbursed by your employer, these costs would be an allowable deduction against your employment income. However, the travel cost of going to the office first is not allowable.
Accommodation and Meals
Where you have to stay away overnight as a result of your job, your accommodation costs and the cost of meals are tax deductible, if they are not reimbursed by your employer.
If your subscription is related to your job and the organisation you belong to is in the list of HMRC’s approved list of professional subscriptions, it is allowable as a tax-deductible expense against your employment income.
Your home expenses are an allowable deduction against your employment income if HMRC accepts your place of work, as an employee. is your home.
Further, you need to convince HMRC that the home expenses you are claiming are incurred wholly exclusively and necessarily on the performance of the duties of your employment.
HMRC are hard on this area and they will only accept that these conditions are met if the work you do at home is substantive as part of your duties as an employee. Further, at any stage, you were NOT able to choose between working from home, employers premises or elsewhere.
The cost of broadband is only allowable if it is exclusively used for business use.
If you would like any further information, please contact Southside Accountants in Wimbledon.
Written by Aziz Merchant FCCA