When the tax year finishes your employer is obligated to give you a P60 by the 31 May and P11D or P9D if you earn less than £8,500pa by the 6 July for all benefits in kind or expenses that are taxable. Employers can get a dispensation from HMRC in which case you will only get a P11D for items not covered by this.
So what next?
A P60 is a statement of earnings for the year showing how much you’ve been paid for the whole tax year, separating your current employer from previous employments, tax paid and your final tax code. It also includes National Insurance paid by you and your employers with your NIC coding; which may change during the year, depending on your circumstances.
Don’t ever lose this, it can’t be replaced and is a permanent record of earnings, tax paid and coding.
It is the employee’s responsibility to ensure all the information is correct including the tax coding. If it is wrong and not enough tax has been collected, HMRC will want it.
The P11D or P9D states the amount of benefits or expenses paid to an employee. If you received taxable benefits your tax free earnings will be reduced by the amount of the benefit received. Again check if they are reflected in your tax coding, if not HMRC will be after you too.
So what expenses can be claimed?
The overriding term is “Expenses incurred wholly exclusively and necessarily in the performance of the duties of the employment” s336 ITEPA 2003)
If your employer reimburses your expenses you can’t make any claims.
To start off you can’t claim travel from home to work. Only from your work place to another work related location. Watch out for home working, even a tax inspector got that wrong. Rules for temporary staff are more complex and there is a 24 month rule to be considered s337 and s338 ITEPA 2003.
If you use your personal vehicle you can claim for expenses not reimbursed by your employer although it depends on the mileage and rate paid.
You can only claim what is not reclaimed from your employer. Note there are some rules on temporary accommodation of which you could fall foul.
Fees and Subscriptions
Always a favourite, there has been loads of debate and there is case law and precedent to be careful of.
Subscriptions to named professional bodies are allowed as are examination fees. Training costs are not, even if they are part of your contract of employment; but continued membership of a professional body as a condition of employment is allowed. Confused? Claims are made under s336 ITEPA.
Another area to watch out for is where you apportion an expense. This will be disallowed as it is not exclusively incurred. (For the self-employed this criteria does not have to be met).
Working from Home
You can only claim additional household expenses if the following conditions are met:
- Substantive duties performed at home
- Cannot be performed without use of facilities
- Facilities not available at employer’s premises or job requires
- Employee has no choice
You can claim up to £3 a week without keeping records, or more if justified. It includes all utilities and any business calls. Again no apportionments are allowed eg rent, mortgages or council tax.