Tax relief for job expenses UK

Tax relief for job expenses

Employees who are working from home may be able to claim tax relief for bills they pay that are related to their work.

Employers may reimburse employees for the additional household expenses incurred through regularly working at home. The relief covers expenses such as business telephone calls or heating and lighting costs for the room you are working in. Expenses that are for private and business use (such as broadband) cannot be claimed. Employees may also be able to claim tax relief on equipment they have bought, such as a laptop, chair or mobile phone.

Employers can pay up to £6 per week (or £26 a month for employees paid monthly) to cover an employee’s additional costs if they have to work from home. Employees do not need to keep any specific records if they receive this fixed amount.

If the expenses or allowances are not paid by the employer, then the employee can claim tax relief directly from HMRC. Employees will receive tax relief based on their highest tax rate. For example, if they pay the 20% basic rate of tax and claim tax relief on £6 a week, they will receive £1.20 per week in tax relief (20% of £6). Employees can claim more than the quoted amount but will need to provide evidence to HMRC. HMRC will accept backdated claims for up to 4 years.

Employees may also be able to claim tax relief for using their own vehicle, be it a car, van, motorcycle or bike. As a general rule, there is no tax relief for ordinary commuting to and from the regular place of work. The rules are different for temporary workplaces where the expense is usually allowable if the employee uses their own vehicle to do other business-related mileage.

Note, that if an employee agreed with their employer to work at home voluntarily, or they choose to work at home, they cannot claim tax relief on the bills they have to pay. If an employee previously claimed tax relief when they worked from home because of coronavirus (COVID-19), they might no longer be eligible for relief.

Source:HM Revenue & Customs| 24-09-2022

Interest rates on student loans from September 2022

Student loans are part of the government’s financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying. It is HMRC’s responsibility to collect repayments where the borrower is working in the UK. The Student Loans Company (SLC) is responsible for collecting the loans of borrowers outside the UK tax system.

The interest rates that will apply for the 2022-23 academic year were announced in August. Earlier in the summer, the government had announced that student loan borrowers faced a 12% interest rate from September 2022. The government announced in June that there would be a cap of 7.3% on student loan interest rates for current graduate borrowers to protect them from a rise in inflation. This interest rate was calculating using predicted market rates. The actual market rate reduced to 6.3%, so the cap has been lowered to this figure.

The 6.3% rate will apply to student loan borrowers on Plan 2 (undergraduate) and Plan 3 (Postgraduate) loans. This change will impact the total value of the loan, but there is no difference in the monthly repayments paid.

A spokesperson for the Student Loans Company said:

‘The change in interest rates is automatically applied so customers don’t need to take any action. We encourage customers to use SLC’s online repayment service to regularly check their loan balance and repayment information, as well as ensure their contact information is up-to-date.’

There are also new measures that will apply from 2023-24 to ensure that new graduates will not, in real terms, repay more than they borrow.

Source:Department for Education| 05-09-2022

Working from home

If you receive no compensation from your employer, you can still claim tax relief for certain costs that arise when working from home. HMRC will usually allow you to claim tax relief if you use your own money for things that you must buy for your job, and you only use these items for work. You must make a claim within four years of the end of the tax year that you spent the money.

Costs you may be able to claim for include:

  • if you purchase your own uniforms, work clothing and tools for work;
  • the cost of repairing or replacing small tools you need to do your job as an employee (for example, scissors or an electric drill); and
  • cleaning, repairing or replacing specialist clothing (for example, a uniform or safety boots).

A claim for valid purchases can be made to recover actual costs or as a 'flat rate deduction'. However, you cannot make a claim for relief on the initial cost of buying small tools or clothing for work.

You may also be able to claim tax relief for using your own vehicle, be it a car, van, motorcycle or bike. As a general rule, there is no tax relief for ordinary commuting to and from your work. The rules are different for temporary workplaces where the expense is usually allowable. You should also be able to claim if you use your own vehicle to undertake other business-related mileage.

Please note, if you have agreed with your employer to work at home voluntarily, or if you choose to work at home, you cannot claim tax relief on the bills you have to pay. If you previously claimed tax relief when you worked from home because of coronavirus (COVID-19), you may no longer be eligible for relief.

Source:HM Revenue & Customs| 30-08-2022