I am employed and have expenses do I need to fill in a tax return?

Lots of employed people can claim back a tax rebate for work related expenses. If your expenses are £2500 or over in any one tax year, you will normally have to claim them back on a Self Assessment return.

The rules allowing expenses are quite strict. You need to make sure that you are only claiming expenses that are allowable, because if your tax return is checked and is found to be wrong any tax rebate you have received will be taken back, and in some cases penalties will be imposed.

A good starting point is to ensure your expenses meet the following criteria:

1. As an employee you are under obligation to incur and pay the expenses as the employee.

2. The amount of money you have spent is incurred wholly and exclusively by you and is a necessity of your job and its duties.

Claiming expenses on a tax return – what can I claim for?

A tax rebate on expenses is usually available for:

• Membership of professional bodies.
• Tools and equipment.
• Work-related mileage when using your own car van or motorbike.
• Work travel and accommodation.
• Working from home – in cases where this is a contractual requirement.

Unsurprisingly, there are a number of criteria to assess before being permitted tax relief on anything you are intending to claim. Typically, the biggest problem is successfully arguing that an expense is necessary if it is not refundable by the employer.

In some professions, there is an agreed fixed rate for these costs – uniforms and tools for example where these are a necessary expense of the employee not refundable by the employer.

Important

If you have receipts for your expenses and the total amount is more than the fixed rate expense, you should claim back the totals from your receipts and not the fixed rate expense.

Claiming expenses this way will give you the full amount you are entitled to, because your actual expenses are more than the fixed rate expense.

How do I claim expenses on my tax return?

How you claim expenses on a tax return is reliant on your circumstances. You can complete your tax return either online or by paper. A Self Assessment tax return has specific pages to enter work related expenses.

Which box needs filled in depends on the type of expense or expenses you are claiming. It’s recommended that you double check you are filling in the right box with the right expenses figure before submitting your tax return. If an entry is wrong you could receive too much or too little tax relief.

For example if you are claiming mileage tax relief you need to take into consideration any travel paid to you by your employer before you enter a figure on your tax return.

Claiming expenses on a tax return – helpful tips

• A claim for expenses might be rejected by HMRC who could subsequently ask for a refund against anything they have previously agreed.
• As mentioned above, any claim over £2,500 requires a tax self-assessment form and once you are enrolled in the system, all the penalties associated with self-assessment will apply to you. If you later decide you no longer want to go down this route, you must contact the tax office to be removed from the self-assessment process
• If you ignore tax return forms that are sent to you, you will face a penalty up to £1,800 per year, plus any estimated tax demand you might receive.