Old Mill Updates

Tax relief on fixed rate expenses for key workers

With announcements over the previous weeks regarding the support packages for businesses and self-employed individuals, it’s important to remember the tax relief available to employees.

15th April 2020

Tax relief can be claimed by employees where they’re required to clean or maintain their work uniform. The fixed rate relief also helps to recover the cost of employees having to spend their own money on repairing or replacing equipment needed for their job.

This isn’t a new relief, but it’s widely unclaimed, largely due to a lack of awareness of its availability.

If you’re required to wear a uniform (there are set rules for what constitutes a uniform) and you must wash this yourself, you may be able to claim the fixed rate relief. This claim may create a repayment from HMRC if you have previously paid tax on earnings from this job and can help to pay less tax going forward, by having your PAYE coding notice updated to reflect this.

HMRC have a list of examples of employees that are eligible to claim the relief. Find out more here.

Individuals in the NHS, armed forces, police and fire services are specifically listed to qualify for this relief, among other vital key services.

If your job isn’t listed, you’ll still be able to claim a flat rate of £60 if you meet the qualifying criteria.

A claim can be back dated for the previous four tax years which helps to increase the possible repayment due. As we are now in the 2020-21 tax year, this means a claim could be made from the tax year 2016-17 onward.

Below is an example of a possible repayment available to a nurse:

Fixed rate expenses:
Uniform £125.00
Shoes £12.00
Tights or socks £6.00
Total allowance for one year £143.00
Allowance for four years £572.00
Tax repayment due at 20%   £114.40

The above is an illustration based on an individual being a basic rate taxpayer, employed throughout the period, for the previous four years.

The amounts involved may not be ground-breaking but it’s the little wins that can make all the difference.

Where other job-related expenses are incurred personally, a more specific claim can be submitted to HMRC to receive the tax relief on these. Examples of this include professional membership fees, unreimbursed mileage to a temporary workplace or tools if you’re a mechanic and your employer does not provide them. Receipts are required to make and support the claim, which isn’t the case for the fixed rate expenses. A specific expense relief claim would need to be investigated in more detail in comparison to the flat rate expenses, to ensure the qualifying criteria is met.

It’s important to note that if your employer pays all expenses, or if you’re self-employed, a claim cannot be made under this relief.

How can I check if I am already receiving the relief?

PAYE coding notices will reflect what allowances are being given at source on your employment income and will detail if a flat rate expense has been included. If you haven’t received a paper copy of this, they’re readily available on your online government personal tax account.

How to make a claim

HMRC’s guidance helps to outline how you can make a claim and more detail can be found here.

A claim can be made either online, by post or over the phone. The most efficient way to make a claim at this time would be via HMRC’s online service, due to staff shortages at HMRC, as they have been redirecting members of staff to other and new departments to help deal with the current pandemic.

If you already prepare a tax return, the fixed rate expense can be claimed via the employment pages of your return in box 18.

We appreciate at this time that key workers are extremely busy and may not have the time to deal with this. However, it’s possible for a designated individual (e.g. spouse or civil partner) to do this on their behalf. For example, a postal claim can be drafted by an individual ready for approval (signature) by the taxpayer.

If you have any queries regarding the above and making a claim or would like to know more information about specific expense claims, please do get in touch.