EIM 66780 deals with the tax treatment of NHS employees: expenses, payments and allowances.
Here are the expenses, payments and allowances rules as they apply to NHS employees.
Hang on to your hat – it gets confusing, seemingly contradictory and there are lots of interconnected regulations to refer to with specific HMRC definitions of words we already thought we knew! We’ll do our best to simplify and summarise.
You can use our free NHS tax rebate guide for more information on how to claim common employment related expenses.
NHS workers uniform and clothing tax relief
If there is a uniform or requirement to wear “distinctive clothing” at your workplace then no tax is payable either by the employee or the employer. (‘Distinctive clothing’ means something that shows you are part of a group, for example, the same colour and style.)
If you wash your own uniform yourself and you are not provided washing facilities by the NHS you can claim back a flat rate expense to help cover the cost.
If you are given money to buy work wear by your employer then this amount can be taxed if it is deemed “excessive” by HMRC. If your employer buys and keeps your work clothes at your workplace then they are taxed on that.
Editors Tip: It’s also worth knowing that you can claim tax relief on the cost of shoes and tights, and professional fees into some Unions and professional bodies like the NMC.
NHS workers home to work travel
A normal commute from home to a permanent workplace. If you get any money for this expense from your employer then it is considered earnings and is taxable. If you use your own car for work purposes to travel to temporary workplaces you can claim tax relief on the cost incurred. What you can claim back depends on the amount the NHS has paid you per mile and if the mileage allowance is taxable or not.
Private use of allocated cars
If you have an official work car then there may be some car benefit charges which will apply to you if you use it for private journeys.
Removal and Associated Expenses Removal costs
If you are an employee and you pay the removal costs yourself then there is no tax deduction. If you are an employer and provide removal, pay for or reimburse moving costs then you can claim tax exemption for the first £8,000.
Excess rent allowances
If you are made to transfer to an area where your rent is higher, then you can sometimes get financial compensation from your employer. These are called Additional Housing Cost Allowances and will be taxed as income.
Advances of salary for house purchase
This would be considered a ‘taxable cheap loan’ by HMRC, rather than earnings. It is called a beneficial loan and there are particular rules which will apply. It is called a taxable cheap loan because there is no interest paid or interest that is less than the official rate of interest.
Tool Allowances
If you are given any money from your employer to buy tools, then this is considered ‘earnings’ and is a taxable allowance.
If you pay yourself, then you are entitled to claim tax relief on these expenses.
Emergency callouts
Usually emergency callout expenses to your permanent workplace are taxable, even if it’s outside normal working hours or a call-back after completing a day’s work. But you can claim business mileage if you can prove that you have “embarked on your duties before starting the journey”. HMRC have a 3 point definition of this;
- That you have given advice over the phone when you get the emergency call.
- That you have accepted responsibility for the emergency.
- That this responsibility continues to be yours as you travel to the emergency.
NHS Business mileage means different things depending on how you travel and your contract.
- If you are paid a call-out fee at a flat rate then you are not entitled to fuel money unless this arrangement is part of your package.
- If you use your own car to get to an emergency callout then you are entitled to claim for fuel expenses depending on what you are paid by your employer.
- If you use a work car then you will get a car fuel benefit charge instead of a charge on the proportion of expenses relating to fuel.
Employees in Northern Ireland have a much simpler system agreed with the Department for Health. Employees submit a certificate along with their request for reimbursement of expenses following an emergency callout. They then receive any money directly from their employer, who then sorts out the business mileage tax relief with HMRC directly.
Late Night Duties and Meal Allowances
Any allowances you receive for night duties or for meals at your usual place of work are considered ‘earnings’ and are taxable.
Usage of home phone for work purposes
If your employer pays for the line rental, charges and calls then this is classed as ‘earnings’ under the tax benefits code and is taxable.
If the employee is the subscriber to the phone company
When you are pay for the line rental and charges and your employer pays for the outgoing business calls, this amount usually not regarded as earnings by HMRC. When your employer’s payment for phone costs is classed as receiving earnings, you are then entitled to a tax deduction on the cost of business calls and sometimes line rental.
Allowance to garage a work vehicle
If you have responsibility for a work car or van, you may be required to rent a garage to house it. Any money you are reimbursed for this expense is not taxable. But if you are paid an allowance to keep a work vehicle in your own garage, then that is classed as ‘earnings’ and is taxable.
It makes no difference if your garage is physically attached to your home or not. If your employer officially rents your garage from you, with a lease agreement, then this can be considered under Property Income rules by the Tax Office.
