Sunday, 4 July 2010

Reclaiming income tax on allowable expenses incurred as an employee

As an employee you may be able to reduce your tax bill by getting tax relief on any professional fees, subscriptions or other expenses you incur wholly, exclusively and necessarily in the course of your employment, which have not been reimbursed by your employer.

If you don't complete Self Assessment Tax returns you can go back several years to get the relief.

It may be that in order to do your job you need to have your name included on a professional register or to have a special licence. Or it could be that it's very helpful to belong to an organisation whose activities are necessary to your work. Either way you'll pay registration fees or membership subscriptions - usually every year. You may be able to deduct the cost of these from your taxable income and reduce the amount of tax you pay.

You may get tax relief on professional fees and subscriptions if you have registered, obtained a licence or become a member of the organisation in question because it's necessary to your work and HMRC has approved the organisation you're a member of (see http://www.hmrc.gov.uk/list3/list3.htm).

You can't get tax relief on any fees and subscriptions that you pay to an organisation that HMRC hasn't approved.

You won't be entitled to tax relief on a life membership subscription, or if you haven't paid for the allowable professional fees and subscriptions yourself - for example if your employer has paid them and has agreed a 'dispensation' with HMRC
When HMRC approves an organisation and adds it to the HMRC list they ask the organisation to let their members know that they might be entitled to tax relief on their fees or subscriptions. Your organisation can tell you how much you are allowed to deduct.

The first time you ask for tax relief for your expenses you'll have to contact HMRC in writing. If your expenses are over £1,000 they will ask you to fill in form P87 http://www.hmrc.gov.uk/forms/p87.pdf to give more details.

Contact me if you have any other employment expenses you believe you may be able to claim relief for and I can advise you further. I can also provide a letter template for submitting your claim to HMRC.

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