The Claiming Of Expenses
There is a common misconception that the claiming of work related expenses is restricted to contractors or those individuals that are self-employed. However, the truth is very different.
HM Revenue & Customs (HMRC) have several rules relating to the claiming of expenses and these are applicable to all individuals, not just a select few. In order for an expense to be eligible for tax purposes it must satisfy the following criteria:
These rules allow for all employees to claim a great deal though few are aware of the details. A common example is that of travel expenses. While an employee may not claim the cost of travel to and from their normal or permanent place of work they are entitled to claim the cost of any travel incurred while performing their duties such as travelling to other sites or a client's premises.
The regulations attempt to differentiate between an expense that might be used for both work and personal purposes and those which are necessary for work. For example, the purchase of a suit would not be allowable as this might be used outside of the workplace and so have a dual purpose. However, the costs of safety clothing or an item that was part of a recognised uniform would be acceptable.
There are also some expenses that may be partially claimed, such as the use of a home telephone for business purposes. In such cases the costs of the business element would be allowable, such as the cost of the business calls themselves, while the non-business element, such as the line rental, would not be.
It should be noted that where an employer re-imburses an employee for an expense that they have incurred the cost is no longer deductible for tax purposes as the overall cost to the employee is zero.
The following table provides a basic summary as to which expenses are allowable for tax purposes and which are not:
| From |
To |
Description |
Tax Treatment |
Home |
Permanent workplace |
Ordinary commuting |
Disallowed |
Workplace |
Workplace |
Business travel |
Sometimes allowed |
Home |
Temporary workplace |
Business travel |
Allowed |
Home |
Depot |
Ordinary commuting |
Disallowed |
Summary
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The rules relating to claiming expenses apply to all employees
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An expense that is wholly and exclusively for the purpose of work is allowable
-
To be allowable an expense must not have a dual purpose or provide any form of personal gain or benefit
-
Flat-rate allowances are available though the amounts vary according to the industry
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