It is not easy to decide what is and what isn’t claimable for tax purposes. The tables set out below give an indication, it is not exhaustive and there are always exceptions, so please take professional advice for material amounts. Also, the rules change with case law, as well as with specific statute changes.
Expenses paid by the individual (not the employer) – tax deductible or not?
| Employed | Self-employed | |
|---|---|---|
| Initial cost of small equipment needed to do the job | N | Y |
| Repairing or replacing small equipment | Y | Y |
| Uniforms or protective clothing | N | Y |
| Cleaning + repairing or replacing specialist clothing | Y | Y |
| Business mileage not reimbursed at 45p/mile | Y | Y |
| Fuel and vehicle costs (alternative to 45p/mile) | N | Y |
| Interest on car loan or hire purchase for a car | N | Y |
| Travel to a temporary place of work (from a main place) | Y | Y |
| Travel + accommodation + subsistence and parking for business travel | Y | Y |
| Professional fees or subscriptions on HMRC List 3 (NASGP still listed as ‘Non-Principals – in process of being revised by HMRC!) | Y | Y |
| Other professional fees and subscriptions | N | Y |
| Working from home – proportion of bills for business use or £4/week | Y | N |
| Working from home – proportion of bills for business use or tiered rate of £10 £18 or £26/month | N | Y |
| Business phone calls; computer and photocopying costs | Y | Y |
| Equipment used for work (lasting > 2 years) through capital allowances | Y | Y |
| Training update costs | Y | Y |
| Exam and training costs essential under training contract | Y | N/A |
| Secretarial or administrative assistance | N | Y |
| Bank charges for business bank account | N | Y |
Most of the expenses paid above by the employer will not be taxable as a benefit on the individual.
Things for which you get effective tax relief but which are not deductions in accounts
| Childcare vouchers (but new childcare accounts will be open to both employed and self employed) | PAYE | N/A |
|---|---|---|
| Pension contributions NHS scheme | PAYE | Tax return |
| Charitable donations under gift aid | Code or tax return | Tax return |
| EIS and similar investments | Tax return | Tax return |
Things you might think should be deductible but aren’t
- Travel to and from normal place of work
- Smart clothing for work
- Normal dry cleaning and laundry bills
- Normal meals while on duty
- Training to acquire an entirely new skill – eg MBA
- Duality of purpose – where a cost cannot be split between business and personal use
- Business entertaining and gifts
- National insurance contributions
- Locum insurance that is actually sickness insurance (i.e. it pays you if you are sick, doesn’t pay a locum to cover you)
- Permanent health insurance
- Critical illness insurance
- Medical insurance
- Private medical costs
- Normal reading glasses: exception where glasses need to be for a specific focal length not suitable for personal use
- Costs that don’t relate to the business in question eg visa costs to start a new job abroad
Things that are not taxable
- Interest and gains from ISA investments
- Premium bond winnings and certain national savings certificates (not all)
- Dividends from VCT investments
- Certain other interest – Savings allowance from 16-17 – £1000 for basic rate taxpayers, £500 for higher rate, none for additional rate
Things taxable at 0%
- First £5000 of dividend income from 16-17 (but treated as income for purpose of using basic and higher rate bands)
Grey areas
- Courses in holiday resorts where the holiday is more than incidental
- Where is place of business? Home for a locum who is truly ‘itinerant’, but surgery for regular locum work
- Training to extend existing knowledge resulting in a qualification eg masters degree
- Mobile phone contracts where base fee cannot be split between business and personal
- Season tickets for trains/buses where cost cannot be split between business and personal
