Your staff can claim back any personal money used for business purposes from HM Revenue & Customs (HMRC) in tax relief. According to Small Business, almost a third of staff are losing at least £60 in unclaimed expenses every year. Turner Little explains how your employees can claim small business expenses.
Uniform tax relief
First, determine which expenses your employees can claim. Employees can claim expenses for even the smallest of things, such as their uniforms. If you require them to wash a uniform or protective work clothing, they are entitled to recover the costs. They can also apply for a working tax rebate if they incur additional expenses for any extra work involved in caring for their uniforms.
Mileage and travel expenses
If your employees are required to pay travel fees for work purposes, say they have to visit clients, deliver pitches or secure deals, they can claim these travel costs back from HMRC. Also, your staff can claim mileage allowance relief, based on business mileage for a year multiplied by approved mileage rates, if they use their own vehicle to travel to work each day, always provided that their place of work is not a fixed location
Professional fees
Depending on your sector, employees may be legally obligated to sign up to a professional registration body or attain a special license to work for you. You may also advise them to become a member of a professional body for business purposes. In instances where your staff incur these type of professional annual payments, they may be able to claim back the expenses incurred from the UK government.
Tools and equipment
Your employees will be entitled to a tax rebate, typically at a rate of 18% per item, if you ask them to buy tools and equipment for work purposes. Say you run a mechanics business; your staff would have to purchase various equipment e.g. screwdrivers or jump leads, to do their job effectively. Your staff would be able to claim back 18% on the value of these tools from HMRC in tax relief.
Claiming from HMRC
If you allow your staff to work from home, there are a range of work-related expenses they can claim back through tax relief. This could include costs from heating and making telephone calls, to the expenses incurred for using the internet for work purposes. So now you know which expenses employees are allowed to claim back from your company, how do they recover them from HMRC?
This depends on whether allowable expenses reach £2,500. If these costs measure £2,500 or less, your staff can claim by submitting a written record showing all their expenses as evidence of their claim to HMRC. If a worker’s claim exceeds this threshold, they will need to submit a self-assessment tax return to HMRC. The employee will need to list the annual income they receive from their current employer i.e. your business, as well as details such as mileage costs, in specific sections of the form.
Turner Little
As a small business owner, you may be required to handle expense claims. In order to help employees recover costs incurred for work purposes from HMRC, ensure your company has the financial and administrative infrastructure in place to carry out this task effectively. Turner Little provides UK banking advice, as well as a range of corporate services, which you can capitalise on to ensure all expense claims are recovered from HMRC.
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
