Individuals who commence self-employment are may also be employed for part of the tax year, or continue their employment alongside their new self-employed business. When completing their SA tax return you should check whether all their employment-related business expenses have been reimbursed.
Many employers do not reimburse their employees for the full amounts they spend on business related expenses. The common areas where valid business expenses are incurred by employees include:
- business mileage in employee’s own vehicle (claim approved mileage rates)
- fuel costs for business journeys in a company vehicle (claim advisory fuel rates)
- travel and overnight expenses
- professional fees and subscriptions paid to bodies on List 3
- repairing or replacing small tools
- cleaning, repairing or replacing uniforms, protective clothing, or safety boots
- flat rate expenses for certain occupations (see EIM23712)
HMRC have drawn attention to the possibility of making such expense claims in the Employer Bulletin number 65. The employee’s claim can be made on their tax return, on form P87 submitted online or by post, or through the individual’s personal digital tax account on gov.uk. The amounts may be small but they are all welcome for someone on a tight budget.
In the same article HMRC say they receive a lot of invalid claims for expenses. Apparently, employee expense claims have increased by 25% in the last five years, and HMRC are calling for evidence to discover the reasons why.