Nov 8

Nov 8 What are Flat Rate Expenses and can I claim them?

Many employees of small businesses are entitled to Flat Rate Expenses but not a lot of people are not aware of this valuable tax relief. Thousands of pounds in Flat Rate Expense Tax Credits go unclaimed every year, are you or one of your staff one of those missing out?

So, what are Flat-Rate Expenses?

A Flat Rate Expense is a tax relief that is available for particular occupations and looks at costs associated with work activities, for instance uniforms, tools and equipment.

As a Flat Rate Expense, there is a set amount you can claim depending on your occupation. For example, airline cabin crew receive the lowest Flat Rate Expense tax relief of £64 a year, whereas a doctor receives £695 per year.If you're in an eligible occupation, it does not matter how much you earn, you will be eligible for the Flat Rate Expense available for your industry and occupation.

You can check if your occupation is eligible via the HMRC website here. There is also a Q&A you can run through via the HMRC website to determine if you or staff are eligible.

HMRC offer these simplified tax credits to make it easier for you to claim, rather than having to worry about keeping receipts or needing to do paperwork.And the good news is that you can backdate your claims for up to four years and HMRC will adjust your tax code for future tax claims so the tax relief is taking into consideration automatically thereafter.

To claim Flat Rate Expenses you need to have been an employee and have paid income tax in the years which you claim for.Flat Rate Expenses are one of the single most ‘claimable’ expenses out there, so it’s certainly worth checking if you’re entitled to this relief.You don't automatically get the flat rate expenses deduction, so you have to claim it.

Once you confirm you are in a type of qualifying employment, you can claim it, and just like medical expenses, you can go back 4 years!

What can I claim for?

If your occupation is included in the eligible list produced by HMRC, you can claim for the following expenses:

Subscriptions or fees that you have paid for yourself and are needed to carry out your job
Safety clothing or uniform, including laundry costs and repairs
CSCS renewal for construction workers
Any tools you need to buy, maintain and repair, which are needed to carry out your job

The key criteria for claiming these expenses is that you are an employee and you pay income tax and that you incur the expense yourself. So, if for example, your employer paid for these work related costs, or if your employer has reimbursed you fully for these work related costs and therefore you have not been left out of pocket, you will not be able to claim the Flat-Rate Expense.Also be aware that your tax code may have already been changed by HMRC to take into consideration of these work related costs, so again, if this is the case, you cannot claim for Flat Rate Expense, as in this case, you are receiving the tax relief automatically.

If you are self-employed, either as a sole trader or as one half of a business partnership, you need to use Simplified Expenses instead.

VAT Flat-Rate Expenses

Be careful here. You are able to claim flat rate expenses for VAT, which would simplify your VAT return, but you will not also be able to claim back the VAT on any purchases you make.

We take the pain out of claiming expenses

At Mirandus Accountants, we understand what it is like to be a small business owner, as we are a small business ourselves. As a Chartered Tax Advisory practice, we are experts in providing accounting and tax advice and guiding you on the complex expenses system, and as reflected in our testimonials, we provide tax expertise with empathy and understanding to your own unique set of circumstances.We are available right now to help you complete your tax return early so you know how much tax you need to pay and by when.