Expenses

By claiming all appropriate allowances and exemptions you can minimise your tax bill; however, this is not a way of avoiding tax. The rule for claiming expenses is "that an employee or office holder may deduct expenses incurred wholly, exclusively and necessarily in performing their duties".

This page is a summary of the most common expenses you can claim.

The taxman reserves the right to carry out an investigation into your tax return so you must keep all relevant paperwork for at least 5 years after the 31st January deadline of the tax year in question. We may need to see your receipts on occasion to ensure compliance but we will give you 30 days notice of our intention.

Receipts should be kept for all the expenses that you claim. The only exception is the 'fixed rate' subsistence allowance: receipts for these particular expense type are not required.

It is important to remember that claiming for expenses that you have not incurred would be viewed by the Inland Revenue as tax evasion.

Your Account Manager will be able to answer specific questions regarding allowable expenses but here are some examples of the most commonly claimed legitimate expenses:

Travel

You can claim the cost of travel to and from your temporary place of work. Mileage rates are 45p per mile for the first 10,000 miles in any fiscal year and then 25p per mile thereafter. This allowance is to cover fuel and running costs of the vehicle. If you are travelling to work as a passenger in a car you are entitled to claim 5p per mile. You can also claim for parking and congestion charges but you may not claim for parking fines or speeding fines. The cost of travel by public transport can be claimed but you must have a valid receipt. A mileage allowance can also be claimed for travel by motorcycle and bicycle at rates of 24p per mile and 20p per mile respectively.

Food, drink and accommodation

The cost of hotel or bed and breakfast accommodation can be claimed as an expense as can the reasonable cost of additional meals taken in conjunction with overnight accommodation. There are no set allowances for accommodation but the cost must be deemed to be 'reasonable'; this also applies to the cost of meals. You cannot claim for the cost of lunches taken as part of your normal working day as this is not an expense incurred wholly and exclusively for business purposes, since everyone must eat in order to live.

Clothing

The cost of protective clothing that is worn to protect your everyday clothes can be claimed as an expense. Clothing required for the performance of your contract that could not reasonably worn outside of work can also be claimed. You cannot claim for ordinary clothing which would form part of an 'every day' wardrobe even if you would not be likely to wear your working clothes anywhere other than at work. You also cannot claim for the costs dry-cleaning or alterations.

Training

According to Inland Revenue legislation an expense cannot be deducted under the general rule for employees' expenses in Section 336 ITEPA 2003 unless it is incurred "in the performance of the duties of the office or employment". This means that the training course must be wholly and totally relevant to the performance of your duties under your existing contract. It is not enough for the expense to be relevant to the job, or to be incurred in connection with the duties of the job.

Eye Tests

If you are required to use a computer as part of your everyday duties you can claim the cost of an eye test. If it can be proven that you also will need glasses or contact lenses purely for the work undertaken at the computer then this cost can also be claimed.

Subscriptions

The Inland Revenue will permit you to claim, as an expense, the cost of fees and subscriptions paid to professional bodies or learned societies.

Equipment

Claims for equipment must be supported by evidence that they are specifically required for your current contract and that the equipment is wholly necessary for you to perform the assignment. Any general pieces of equipment for your role as a contractor or 'nice to haves' are not permitted by the Inland Revenue.

To Summarise

Our final word on this rather complicated subject is that if you are not sure whether or not a cost can be claimed as an expense, please check with your Account Manager before submitting your claim.