You may often hear people say they reduce their tax bill by claiming expenses. As an employee, this is much harder to do than as a self-employed individual. However, there are a number of ways you can reduce the tax paid through your employment.
If you and your spouse are not higher rate tax payers, one of you can pass over up to 10% of your unused personal allowance to the other.
Work from home
If you work from home and do not receive a payment from your employer, you can claim £6 per week as a tax-deductible expense.
Gift Aid donations
If you are a higher rate tax payer, any Gift Aid donations you make can claim you an additional 20% tax relief. This is only applicable to those who pay tax at 40% or 45%.
If you are a higher rate tax payer and you make any personal pension contributions, you can claim the additional 20% tax relief. There is an annual maximum amount of pension contributions that can be made.
Your occupation may require you to belong to a professional organisation. These subscriptions, if paid by you, can be claimed as an expense and reduce your tax liability. An example would be a surveyor paying a subscription to the Royal Institution of Chartered Surveyors.
Maintaining a uniform
If you have to wear a uniform for work, HMRC allow a flat rate allowance for cleaning, repairing or replacing it. The amount of the allowance depends on your occupation.
Your employer may reimburse you for the use of your personal car when travelling for work (this excludes travelling to and from your usual place of work). Depending on what you receive from your employer, HMRC allows you a flat rate of 45p per mile for the first 10,000 miles, and 25p thereafter. If your employer does not pay you this full amount, you are entitled to claim the difference.
If you claim some of these allowances, you may need to do a tax return, or complete specific forms, to inform HMRC. You may get a tax refund, or an adjustment to your tax code.
Please always seek professional advice. before taking any action. We are happy to answer queries in future issues. Please send your questions through our website: www.champconsultants.co.uk/contact-us