Claiming Tax Relief Online: How Employees Can Save Money and Boost Take-Home Pay

Welcome to another episode of From

Passion to Profit.

On this week's episode, I'm gonna be talking

about tax, but more particularly about

claiming tax relief online, what every

employee needs to know.

Now, before your ears switch off,

stick with me.

'cause this episode could help you keep

more money in your pocket and even get

some money back as well.

Now, if you are an employee, whether that's

working in a studio, a theater, a gallery.

Or something completely different and you pay

for things outta your own pocket to do your job.

And guess what?

That's right.

You might be able to claim tax relief on

those costs, and if you don't claim it,

you are donating those funds to the tax man.

It's like leaving a tip generous, perhaps.

Necessary.

Absolutely not.

So let's just break this down a little bit more.

First thing, what is the idea of employment

expense tax relief?

Now we'll start with what that actually means.

Tax relief on employment expenses Now.

If you're in a situation where you spend your own

money to do your job, not an unusual occurrence,

and your employer doesn't actually reimburse you,

HMRC may allow you to claim that money back

through tax relief.

Now, I'm not talking about lunch breaks or

your Spotify premium.

I'm talking about things like professional

subscriptions, work related travel, using

your car for business trips, tools or equipment

you may need, and also working from home.

Now the golden rule is the expense must satisfy.

Three criteria.

It's got to be wholly, exclusively,

and necessary for the job that you do.

Ladies here, that's HMR speak for.

This was only for work and I wouldn't have spent

the money otherwise.

So what expenses can you actually claim for?

Now, here's a rundown of what you might

be able to claim.

Traveler mileage.

Now if you travel for work, say to rehearsals,

meetings, performances, gigs, and it's not

your regular commute, then you might be

able to claim mileage or transport costs.

So if you're a stage manager working in

a theater and you are traveling to see

suppliers, cast members as part of that role,

then potentially there's a claim there.

Now you will need to keep a mileage log or

details of the train that you've caught,

bus or taxi costs.

More of that later on in this podcast.

Now, there's also professional fees

and subscriptions.

So if you're a member of a union or a trade

body, for example, equity BEC two or another HMRC

approved organization, if it's relevant to

your work and you pay yourself, potentially,

that's claimable.

Let's consider working from home.

Did your employer require you to work from home?

If so.

You might be able to claim part of

your utility costs.

Now, there's also the situation for

uniforms, tools, or specialist kits.

Now, if you've gotta buy tools or clothes

specifically for work purposes, like costumes,

props, and your employer doesn't pay, then you may

get tax relief for that.

Now remember though, everyday

clothes don't count.

If you only wear them for work.

It's sad, but it's absolutely true.

So how does this tax relief actually work?

Well, let's throw some numbers into the mix.

Let's say you spend a couple of hundred pounds

each year on professional subscriptions.

You're a basic rate taxpayer, so 20%

of it as 40 quid.

That's how much you'll get back as tax relief.

Now, unfortunately, H monthly C doesn't

reimburse the whole 200 quid, but your income

is reduced by 200.

So if you recalculate those numbers.

You're paying less tax overall.

Think of it like an extra bit of

personal allowance.

Now let's have a look at the actual claim

mechanism, and this is where you claim

tax relief online through the new form.

Now, last year, HYC paused online expense

claims while they sat down, scratched their

heads, and figured out the new evidence rules.

Now, during that break, the only way

you could actually make those claims.

Unless through personal tax return was to send a

form by post called P 87 and since December, the

online I form is back.

Check out the show notes, by the way, for a link

to the I Form now, but, and it's a big, but this

form is only relevant for claims which are two and

a half thousand pounds or less for each tax year.

Now if your expenses exceed two and

half thousand.

Or you are already doing a self-assessment

tax return.

Maybe you're a high rate taxpayer, maybe you're

got a side hustle and you must meet your claim

through your return, even if it's a small claim.

Now, the natural question is what evidence do

you actually need?

And this is where it gets a little bit more real.

I. Now HMRC would expect evidence with

your claim, so keep your receipts, your

logs, your contracts, keep them safe.

Let's consider some practical examples.

Now, when you are thinking about

subscriptions and memberships, you'll

need a receipt or a bank statement showing

the payment, who it is paid to when it

comes to manage claims.

Get in mind its log, typically tracking the

start date, the end date, the postcode,

the distance, and why you traveled.

So for example, Leicester L one to Birmingham, B

five, a client meeting 48 miles round trip.

Now if you're working from home, you will

need to have some form of proof that your

employer require you to work from home.

Could be your employment contract, a formal email.

Choosing to work from a home 'cause is easier

for you, doesn't count.

Unfortunately, choice doesn't

equate to tax relief.

Now, there may be a situation for equipment

at all that you've had to buy, show the proof

of payment, a receipt or a credit card statement

perhaps that clearly shows what was purchased.

Now, when it comes to things like flat rate

expenses, like tools or uniform, the good news

is you don't actually need direct evidence.

HMRC has a list.

Of approved occupations where they will give a

flat rate claim for that.

Now, natural question is, can you actually

go back further?

Can you backdate claims?

Well, and this is the good bit.

You can backdate claims for up to four tax years.

So if you've not claimed before.

There's no panic, there's still time to

claw back some of that tax, and also HMRC

will give you extra on top of what's called a

repayment supplement.

Just make sure you've got those records and proof

for each particular year.

It's only fair that I talk about the common

mistakes to avoid so you don't get caught out.

Now the classic pitfalls are people

claiming for normal commuting is called

ordinary commuting.

For travel to your normal workplace,

that does not count.

Not keeping receipts or logs, no proof, no

claim, but there is a possibility of making

a reasonable estimate and try and fill in

the gaps accordingly.

When you try and claim for non-work items like

your normal everyday clothing like jeans or

your Netflix account.

Then it's gonna be problematic

to claim that.

Now if you submit duplicate claims

innocently or otherwise, you can't claim.

Twice for the same thing.

Let's have a bit of a recap.

Now.

If you're an employee, whether it's full-time,

part-time, and you spend your own money to do

your job, you might be entitled to tax relief.

You can claim online via H C's new form, but only

if your claim is two and a half thousand pounds

or less and you don't complete a tax return.

Make sure you've got the evidence to back it up.

No guesswork, no fiction, just honest, accurate

records and remember.

Don't dis the claim thinking it's

only small money.

It does compound up.

Even small claims can add up, especially if you

can go back four years.

It's about keeping more of your money

where it belongs.

And that's in your bank account, not HMCs.

Now folks, I know tax may not be everybody's

favorite subject.

We can't avoid it, and where we can.

Let's try and make sure we manage our finances,

so we pay what we legally oblig to do.

No more, no less.

Now, if this episode has, has ticked the box for

you, helps you understand things a little bit

better, I'd love it if you could share it with

your colleagues, your friends, and if you want

questions, you want some help, we'll check out the

show notes and be happy to have a chat with you.

But beyond all, make sure you keep your

finances in shape.

Check out our artist community.

It's free and it's specifically for

artists and creatives.

Until next time, plan it, do it and profit it.