What are flat rate expenses?

A flat rate expense is a set amount of money that an employed person can get tax relief on for work expenses they have incurred.

Flat rate expenses are sometimes known as flat rate deductions and their values are decided by HMRC.

It’s important that you claim for your flat rate expenses to avoid paying too much tax and receive a tax rebate if you’re owed one.

Flat rate expense deductions apply to those who work in trades and industries, in which there are common and essential job related expenses.

In some cases, trade unions have agreed with the tax office an amount to cover the annual cost of job related expenses typically incurred by employees in a number of trades.

What is a flat rate expense for?

You don’t have to be a member of a trade union to qualify for a flat rate expense allowance. The amounts are there to cover expenditures such as:

• Cleaning of work uniform and specialist clothing.
• Repair, replacement and cost of tools and equipment.

How much is a flat rate expense worth?

The amount you can claim depends on your circumstances. The lowest flat rate expense you can claim is worth £60 per tax year, however, many trades and industries have higher flat rate expenses. For example, a Joiner can claim as much as £140 per tax year.

The tax relief given on your flat rate expenses will be calculated by HMRC at the highest rate of tax you pay which typically is at either 20% or 40%.

As an example if you are entitled to a uniform tax allowance worth £60 per tax year and the highest rate of income tax you pay is at 20% you will receive a tax rebate worth around £12 per year.

Can I claim a flat rate expense?

To be eligible to claim flat rate expenses you must:

• Incur allowable expenses because of your job.
• Have paid income tax in the year(s) of your claim.
• Not have the flat rate expense already incorporated in your tax code.

To see if your job is on the list you can use our flat rate expenses directory.

How do I claim flat rate job expenses?

There are two ways you can get the flat rate expense you are entitled to:

• A change in your tax code to reflect your flat rate expense in this current tax year, meaning you will pay less tax for the rest of the year, and in the future.
• By making a tax rebate claim for up to the last four tax years. By back dating a claim you can receive a tax rebate, getting you back income tax you have overpaid.

P87 flate rate expenses

HMRC has a specific form called a P87 which should be used if you are claiming back a flat rate expense for the first time and you don’t complete a self assessment tax return.

If you complete a self assessment tax return you should include your flat rate expense in the relevant employment section of your return.

The P87 can be completed and submitted to HMRC online or by post and let’s you backdate a claim for the previous four tax years.

After a claim for flat rate expenses has been allowed for past tax years HMRC will send you a P800 tax calculation to confirm if you have overpaid tax and send you any income tax due by post or BACS (bank transfer).

Flat rate expenses and your tax code

HMRC will automatically update your tax code after a successful flat rate expenses tax rebate claim so you shouldn’t need to make a claim each year for the same FRE in the future.

The tax code alteration should result in you paying less income tax consistently throughout the tax year.

You should tell HMRC as soon as possible if the flat rate expense no longer applies to your circumstances so they can remove if from your code.