Making sure employees are paying the right amount of tax

09 May 2017

With the end of the tax year gone, thoughts start turning to the completion of tax returns and as well as telling HMRC what income you earned in the tax year it is also a time for making any claims for tax relief on expenses that may have been incurred.

This can relate to when an employee incurs the cost of a business expense but the employer’s expense policy does not cater for reimbursing the cost. HMRC has recently published a newsletter to employers which highlighted this fact and outlined the common areas for which claims can be made.

These are

  • repairing or replacing small tools;
  • cleaning, repairing or replacing specialist clothing, such as uniforms, or safety boots;
  • business mileage (where an employee uses their own vehicle ) or fuel costs (in respect of a company car);
  • travel and overnight expenses; and
  • professional subscriptions or fees paid to approved professional organisations.

To make a claim the employee just needs to fill in an online form (P87) via the Personal Tax Account section on gov.uk.

It is also important as making a claim can also help with HMRC ensuring that they have the correct tax code in place for the current tax year so that employees pay a more accurate amount of tax.

It is interesting that HMRC are encouraging these claims at a time where they have asked for a Call for Evidence on employee expenses due to their wish to understand why such claims have increased by 25 per cent over the last five years.  In our experience most employees are often unaware that they could make a claim for certain expenses and it looks like HMRC are using the employer to spread the word.

For more information please get in touch with Graham Farquhar, or your usual RSM contact.

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