Did you know that temporary employees and agency workers can claim tax relief on specific work-related expenses and mileage?
Some of the most confusing ‘adulting’ type things to get your head around have to be taxes, rebates, expenses and returns. I am not sure if we are programmed to hate tax and everything to do with it or if it all just seems to be ultra-confusing and so we avoid the subject as much as possible.
Whatever the reason, unfortunately, because many of us don’t understand the tax system or what we can reclaim, it means that many of us don’t take advantage of the allowances that are in place and end up missing out on getting a bit of our tax back.
A common misconception is that anything to do with tax and tax relief is for the self-employed but in reality, anyone who pays tax can submit a claim. Don’t worry, you don’t need to be a tax expert to get to grips with it, you just need to know the basics so let’s do some jargon busting first of all:
Tax Year
A tax year runs from 6th April one year to 5th April the next.
Tax Rebate
This is money paid back to you by HMRC when you have overpaid tax.
Tax Relief
Means that you pay less tax to take in to account any money you spend while at work, like mileage or travel expenses.
Income Tax
Each month you incur Income Tax on your wages through PAYE, this is shown on your payslip and is calculated only on the money you earn.
Work Related Expenses
Throughout the year you might have to spend money on things that are related to your work, these are known as work-related expenses.
P87
The tax relief claim form that you fill out to reclaim any work-related expenses that your employer doesn’t pay you back for.
It is unlikely you will ever need to know very much about taxation outside of these things so if you take the time to learn anything, make sure it is these.
What we are looking at specifically in this article is Tax Relief, generally meaning you could pay less tax if you incur work-related expenses.
Because your tax relief from work-related expenses is usually worked out at the end of the year but you pay tax each month ahead of time, a Tax Rebate is issued to you.
Tax relief only applies if you actually pay tax on your wages. If you don’t earn enough to pay tax you cannot claim tax relief
Work-related expenses
As mentioned above, throughout the year you might have to spend money on things that are related to your work. HMRC are pretty strict about what is and is not a work-related expense. The full list of allowable expenses for Tax Relief can be found here.
We will only look at the most common ones that temporary and agency workers tend to incur for the purpose of this article, as at the time of writing (July 2019).
- Uniforms & Work Clothing
- The cost of cleaning, repairing or replacing specialist clothing (for example, a uniform or safety boots)
- Travel and Overnight Expenses
- public transport costs
- hotel accommodation if you have to stay overnight
- food and drink
- congestion charges and tolls
- parking fees
- Vehicles you use for work
- If you use your own vehicle for work, you may be able to claim tax relief on the approved mileage rate of £0.45 pence per mile. This covers the cost of owning and running your vehicle. You cannot claim separately for things like fuel, electricity, road tax, MOT’s or repairs
Travel and mileage expenses
In your normal working day, you will first have to find a way to get to work from home. Whether that is by bus, train, car or space ship, you cannot claim these costs back. This is known as commuting and is not allowable.
You cannot claim travel or mileage allowance for travelling to or from work.
Sometimes however you may need to travel around during the course of your working day, for example, if you need to go out to buy some more coffee for the staff room, the costs or mileage that you incur to get to the shop and back again could be allowable.
Another scenario might be if you do more than one temp job for the same agency in the same day. For example, if you are a Waiter and you do the breakfast shift in one kitchen then travel across town to do the lunch-time shift in another, your day might look something like this:
Journey 1:
Leave home and travel to work – this is a commute and is not allowable for reclaim
Journey 2:
Leave workplace 1 and travel to workplace 2 – this mileage or travel cost is allowable for reclaim
Journey 3:
Leave work place 2 and travel home – this is a commute and is not allowable for reclaim
It doesn’t matter how many work places you travel to in the course of the day providing it is for the same agency, you can reclaim the travel costs, or the mileage used to get to each of them providing the journey doesn’t start or end at home.
Important: You need to keep records of your expenses. You will need to write down travel dates, locations, mileage logs and keep any receipts. You will need these to work out your claim, but you must also be able to present them should HMRC ask for you to back up your claim.
Remember: Tax relief only applies if you actually pay tax on your wages.
How to claim?
It’s all well and good knowing that you can get a bit of cash back but now what do you do with that knowledge?
- You need to set-up a personal tax account online with HMRC – it is pretty straightforward just click here hit ‘Start now’ and work through the steps.
- Once you have your login details for your tax account you can submit a P87 claim form online.The form is easy to follow and the areas to fill-in are clearly defined so you should be ok but there are lots of help sections if you get stuck. Tip: You will need a few details from your payslip so be sure to have it to hand.
- Sit back and wait for your tax rebate to arrive while pondering what to spend it on.
HMRC is your best source of advice for all things tax-related so if you are unsure if you can claim or what you can claim for, click on over to gov.uk and use their handy checker service to see how tax relief applies to your personal circumstances.
