This page covers some other employment expenses and tax reliefs, as follows:
Other employment expenses
Tax relief on expenses for employed homeworkers
Special tools and clothing
HMRC have agreed fixed amount for workers in a range of industries for tools or any special or protective work clothes which are not paid for by the employer. You simply claim the amount shown on the list for your type of industry or profession.
This is a relief which is often not claimed because it is not widely publicised. It applies to many low paid jobs such as nurses, agricultural workers, messengers, labourers. You can find the full list here on the HMRC website.
If you need to claim more than the set amounts you will have to agree this with HMRC.
Professional fees and subscriptions
These are allowable deductions if they are amounts you have to pay in order to carry on your profession e.g. doctors. HMRC also allow annual subscriptions to certain professional organisations approved by them. You can find the list on the HMRC website.
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You can get tax relief for part of your household running costs if you are employed on the basis you work from home or have no choice but to work from home.
You can claim based upon a proportion of your actual household running costs, if you keep records of them all and the extent to which you use your home for work. However, as this can be difficult HMRC will allow a claim for up to £4 a week (from 6 April 2012) as a flat-rate expense. See the HMRC website for more information.
Homeworking and broadband expenses
When people work at least partly from home for their employer - called a homeworking arrangement - frequently such work is carried out online, using a broadband connection. So it is important to understand when your employer can refund your broadband costs without there being any tax implications.
An employer can reimburse you tax free any reasonable additional household expenses which you pay out under a homeworking arrangement. The exemption only applies to payments the employer makes and you cannot claim any unreimbursed expenses by deducting them from your income on your tax return.
So what exactly is a homeworking arrangement? It is a formal arrangement between employer and employee under which you regularly work at home carrying out at least part of your job. These arrangements need not be in writing and need not involve all employees but it would not apply where you just work at home informally and not by arrangement with your employer.
The rules also say you must be incurring additional household expenses by having this arrangement (which include increased charges for internet access). These costs need to be reasonable and be incurred in connection with your job. You cannot however include any costs that would be the same whether or not you worked at home (e.g. council tax).
So far as internet costs are concerned, there is a difference between someone who already has broadband before entering into a homeworking arrangement and a person who subscribes for broadband when they start the homeworking arrangement.
The first situation cannot be treated as if you have any additional expenses because you are using an existing subscription and the cost would be the same whether or not you are working from home.
In the second case, you can be reimbursed a reasonable amount of the initial set-up costs (if any) and ongoing subscription.
If you work at home one day a week and use the internet privately for a lot of your time online shopping or downloading music etc. - you should not be reimbursed the full cost. If however you are based permanently at home and you make hardly any private use of the internet you could be reimbursed the full cost.
Here are some examples to help make this clearer:
Jane didn't have a computer but then she started to work at home under a homeworking arrangement needing internet access and her employer provided her with one for her to use. Jane now subscribes for a broadband internet package, costing £25 a month. As a result of the homeworking arrangement she incurs an additional household expense. Jane's employer can reimburse the full £25 a month cost of the subscription without any tax or NIC implications.
David has a broadband internet connection, which he originally had under his existing qualifying homeworking arrangement. David then moves job, and agrees a homeworking arrangement which needs broadband access with his new employer. It may be possible to treat the broadband costs as an additional household expense.
Cara has an existing broadband internet connection used by all her family. She begins working at home under a homeworking arrangement and uses the existing broadband access in connection with her work. Unless Cara has had to change her broadband internet package (to allow for increased usage), there is no additional household expense. Any refund of her costs by her employer will be taxable as earnings.
Jake has a broadband internet connection used by all his family. When he begins working at home under a homeworking arrangement with his employer, he takes out a second broadband internet subscription (ie, a second telephone line is broadband-enabled) for use in connection with his work. Jake has incurred an additional household expense as a result of the homeworking arrangement. His employer can make a tax-exempt reimbursement of the whole of the cost of the second subscription.
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If you pay tax through PAYE (Pay As You Earn), 'payroll giving' is a way of making regular gifts to UK charities. It allows you to authorise your employer or company/personal pension payer to make the donation from your pay or pension.
The payments are made before your tax is worked out and deducted so you get relief on your donation immediately at your highest rate of tax.
For example - if you pay tax at the basic rate of 20%, and authorise a monthly donation of £10 - you save £2 tax (20% of £10). The actual cost of the donation to you is £8. If you pay tax at the higher rate of 40% and authorise a monthly donation of £10 - you save £4 (40% of £10). The actual cost of the donation to you is £6.
Payroll giving does not affect any other donations you might want to make to charity. You can, for example, make other donations using Gift Aid if you wish.
You can use payroll giving as long as both of the following apply:
- you are an employee or you get a company/personal pension and your employer or pension payer deducts tax through the PAYE system
- your employer or pension payer operates a payroll giving scheme.
You do not have to tell your employer or pension payer which charities you support. The payroll giving agency running the scheme will provide you with a charity nomination form which you can complete and return directly to the agency to tell them where they should send your donations.
Some Payroll Giving agencies can provide you with a charity card or cheque book so that you can make gifts directly to any charity whenever you want to.
Once a gift has been deducted from your pay or pension no refund is possible. Some agencies may charge a small fee, which is deducted from your donation, to cover administrative costs.
For more information have a look at the HMRC website.
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