Expenses which are not reimbursed

Employee expenses

In some more unusual circumstances, you might have to pay for something related to your work and your employer does not reimburse you. It can be hard to get tax relief for this type of expense.

Example: James works for a distillery as a salesman. He is due to go to China on a sales promotion. He wants to increase his chances of selling whisky in China so he enrolls on a Chinese language course and pays for it himself. He claims tax relief for the expense. HMRC rejects his claim because the cost was not incurred in the performance of his duties as a salesman. 

(See http://www.hmrc.gov.uk/manuals/eimanual/EIM31653.htm )

Work expenses you might have could include:

  • travelling costs that you had to spend in order to do your job, such as travel from your office or depot to see a customer. (The cost of normal commuting – travel from where you live to where you work – is a private expense). Food and hotel costs can be included with the travel costs where it is necessary to stay away from home
  • professional subscriptions, if you have to belong to a professional body to be able to do your work
  • any other costs that you had to spend just to do your job – such a safety clothing

You will have to decide if the expense is allowable as a deduction for you as an employee. A good place to start is by looking at the HMRC website http://www.hmrc.gov.uk/manuals/eimanual/EIM31630.htm.

If you use your own vehicle for work you should look at http://www.hmrc.gov.uk/manuals/eimanual/eim31200.htm.

How to get tax relief

If you have tax-deductible work expenses which have not been reimbursed by your employer, and your allowable expenses are under £2,500, you can make a claim for tax relief using Form P87. If your claim is for £2,500 or more, you will need to register for self assessment and complete a tax return (phone the self assessment helpline on 0300 200 3310).

Some employees are given tax relief for particular recurrent expenses – such as professional subscriptions – through their PAYE coding. You can ask HMRC to arrange this for you by contacting your employer’s tax office.

Some employees, such as higher rate taxpayers and company directors, normally need to submit an annual tax return. These employee can make a claim for expenses on the tax return.

Sometimes HMRC will give relief over the phone. In this case, total expenses must be no more than £1,000 (or up to £2,500 for professional subscriptions). For details see – http://www.hmrc.gov.uk/incometax/how-to-get.htm#2.

There is more guidance on how to get tax relief for expenses as an employee on the HMRC website at http://www.hmrc.gov.uk/incometax/how-to-get.htm