As an employee, you might spend your own money on things that help you do your job better or to meet costs that are related to your work. It may be possible to claim tax relief on some or all these costs, but the rules on what expenses are allowable are quite strict.
There are two principal conditions that must be met before a claim can be allowed:
- The employee is obliged to incur and pay the cost and
- The amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment.
What these rules mean has been tested by the courts and based on the court decisions, HMRC has issued guidance to their staff on how they should be interpreted. Their guidance includes:
- The expense must be necessary for every employee that holds that job: individual circumstances are not relevant
- The expense must be made only for the purposes of the job itself and not for any related activities, however important those may be
- The expense must be exclusively for that specific employment, it must not be partly for another role or job, a future job or for personal reasons
- The expense claimed cannot exceed the income from the job.
As the rules are clear that an allowable expense must be very closely linked to the job itself and must be necessary to perform the role, in many cases the employer will pay the cost directly or will reimburse the employee for the costs. If the employer does meet the cost, a claim for tax relief by the employee cannot be made.
Employers may also reimburse other costs or pay allowances to their staff. The same rules apply to these payments, and if the strict conditions are not met, the amounts paid by the employer are treated as additional taxable income. If your expenses have been reimbursed by your employer you cannot make a claim for tax relief as you will not have incurred and paid the costs.
Expenses that may be claimed – travel, food and more
Making a claim for expenses as an employee
Employee homeworking rules and expenses
