These are tough economic times – the disruption wrought by Covid, the war in Ukraine pushing energy prices through the roof, mortgage rates increasing as inflation rises.
Anything, however small, which can help close the gap has got to be worth examining.
Maximising tax relief is one way to combat the haemorrhage of cash.
Particularly important for the many PAYE employees who don’t complete a self-assessment form.
In general, you might be due tax relief if you use your own money for things that you must buy for your job and you only use these things for your work. You cannot claim if your employer reimburses you.
It will be based on what you’ve spent and the rate at which you pay tax.
If your claim is for the current tax year, HM Revenue and Customs will usually make any adjustments needed through your tax code. If for previous tax years, HMRC will either make adjustments via the coding or give you a tax refund.
The greatest focus is probably on working from home and travel.
You may be able to claim tax relief for additional household costs if you have to work at home on a regular basis, for either all or part of the week.
Gas and electricity, metered water, business phone calls including dial-up internet access all come into play. You cannot claim for the whole bill, just the part that relates to your work.
You can opt for £6 a week from 6 April 2020 (for previous tax years the rate is £4 a week) without any need to keep evidence of your extra costs, or the exact amount of extra costs you’ve incurred above the weekly amount for which you will require the likes of receipts, bills or contracts. You’ll get tax relief based on the rate at which you pay tax. For example, if you pay the 20 per cent basic rate and claim tax relief on £6 a week you would get £1.20 per week in tax relief (20 per cent of £6).
Turning to travel, you may be able to claim tax relief if you use cars, vans, motorcycles or bicycles for work.
This does not include travelling to and from your work, unless it’s a temporary location.
If you use your own vehicle or vehicles for work, you may be able to claim tax relief on the approved mileage rate. For cars and vans, it is 45p for the first 10,000 business miles in the tax year, then 25p after that.
This covers the cost of owning and running your vehicle.
You cannot claim separately for things like fuel, electricity, road tax, MOTs or repairs.
To figure out how much you can claim for each tax year you’ll need to keep records of the dates and mileage involved in your work journeys, add up the mileage for each vehicle type you’ve used for work, and take away any amount your employer pays you towards your costs (sometimes called a ‘mileage allowance’).
With company cars, you can claim tax relief on the money you’ve spent on fuel and electricity in relation to business trips. Keep records to show the actual cost of the fuel.
If you have to travel for your work you may be able to claim tax relief on money you’ve spent on food or hotel accommodation.
Other significant sectors to explore are uniforms, work clothes and tools; professional fees and subscriptions; and equipment, for example a computer you have to buy to do your job.
For further details, go to Claim tax relief for your job expenses – GOV.UK (www.gov.uk).