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All our PAYE people stand up 🙌
If you pay your salary through PAYE and you have expenses that your company or employer does not reimburse you for, you could be eligible to claim them back. Isn’t that just the best news you’ve heard all day?
Usually, you hear about self-employed people or businesses claiming expenses. Well, we’re here to tell you that even if you’re an employee, you can still claim for expenses (if you’re eligible, of course). Hurray!
There are a few specific situations we’ll get into, but first, let’s make sure you know the basics.
PAYE stands for pay-as-you-earn. It’s a way to pay your Income Tax and National Insurance through your salary as an employee.
Your employers will pay HMRC what you owe directly based on your tax code.
Your employer will use your P45 or the New Starter Checklist (if it’s your first job or you’ve lost your P45) to determine your tax code.
Next, they’ll take out the taxes you owe from your monthly salary and send it to HMRC on your behalf. You’ll receive a P60 from your employer with details of the payments they made to HMRC, your income and earnings, and all that good stuff over the tax year (6th April – 5th April).
HMRC’s favourite saying when it comes to expenses is “wholly, exclusively, and necessarily”. Basically, anything you’re claiming back as an expense has to be an actual requirement to do your job. Without whatever it is you’re trying to expense, you wouldn’t be able to do your job properly.
Sounds dramatic, but hey, that’s HMRC for you.
So claiming the cost of your Netflix subscription because you watch it during your lunch break won’t make the cut, sorry!
Rule number 2 is that you can’t claim expenses on anything that your work reimburses you for. Pretty straightforward🙋‍♀️
What you can claim completely depends on what you do for work. Here are some common expenses you might be able to claim as a PAYE employee:
If you travel for work, you can claim the costs for fuel, bus or train fares, mileage, parking fees, tolls, etc.
If you have to wear a uniform or protective clothing specifically for your job, you can claim back the costs of buying, repairing, or cleaning.
Tools and equipment
If you buy tools or equipment you need for work, you can claim the cost of buying and maintaining them. These tools must be essential for work and cannot have been provided to you by your employer or contractor.
Professional fees/subscriptions
If you’re a member of a professional organisation related to your job you can expense your membership fees. You can also expense the costs of subscriptions or publications you have to subscribe to for work.
Training or Education
If you need to take courses or go to training sessions for work, you can claim back the cost of them.
Work-related phone/internet costs
If you have a phone specifically for work or even use your personal phone for work, you might be able to claim some or all of the costs associated with it.
Remember, these all have to be exclusively related to your job and your employer can’t have reimbursed you for any of it. And there can be more! The expenses depends on what you do for work, so this list isn’t exhaustive.
There are two ways you can do this.
The first way is to get PAYE tax relief through the P87 form. After you send it to HMRC, they’ll change your tax code which will let you take home more of your salary, essentially paying less in tax – woohoo!
It’s usually paid back in small increments. But, there are requirements! Double check you qualify for PAYE tax relief👇:
Apply for the relief online or by post.
The second is to submit a Self Assessment tax return. If you don’t fit all the criteria above, you’ll have no choice but to use this option. You’ll need to let your accountant know of the expenses you’re trying to claim to see if you’re eligible for a tax reduction or rebate.
You can do this through TaxScouts👩‍💻
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