Tax on; tax off

by Paul Donohoe, Managing Director, Tax Rebate Services
29 Oct 2015
Tax on; tax off

How many of these items have you bought for work in the last year?

  • Tools
  • Equipment
  • Uniform
  • Safety equipment, including footwear
  • Tool box
  • Washing powder to launder you work uniform

Then you are probably entitled to claim back the tax on those purchases with a mechanic’s tax rebate claim.

There are two ways to claim…

If you have spent less than £120, then you can make a claim for the ‘flat rate expense’, or ‘tool allowance’.  If you have spent more than £120 and you have kept your receipts, then you could be better off making a ‘capital allowance claim’.

The Tax Office allows particular trades and professions to make ‘flat rate expense’ claims for certain work related expenses without any receipts as supporting evidence. For mechanics and auto technicians, this amount currently stands at £120 per tax year. You claim for 20% of this, which works out at £24 per year. This type of claim can be backdated for four years only.

A ‘capital allowances’ claim generally allows you to claim more money back as it involves using the actual amount you spent and it must be backed up with the relevant receipts or an ‘activity report’ from your tool provider. Usually you can expect to get back 20% of your total spend for that tax year. This type of claim can be backdated as far back as your receipt history, as long as the tools in question are still in use.

You can make a claim at the end of every subsequent tax year and your tax code will be altered to include the flat rate amount, so you pay less tax overall. It makes no difference where you bought your tools from – online, DIY store, eBay – as long as you have proof of purchase to make a capital allowances claim.

Does this affect my employer?

All communication about any tax relief is privately made between you and HMRC, it does not concern your employer at all. Any rebate comes directly from HMRC and your employer is in no way liable for any money. This also means that your claim is not affected by having a variety of employers during the time you are claiming for.

How much will I get and how long does it take?

Two key practical questions! The amount is determined on an individual basis, taking into account your earnings and amount of tax you have paid. A reasonable guideline is 20% of the total you have spent on work expenses.

The length of time is entirely dependent on HMRC’s workload. It has been an average processing time of 8-12 weeks, but it can take longer.

What about other work expenses I pay out?

HMRC allows tax relief on a variety of work related expenses that you can include in your claim if they are applicable to your personal situation. For example:

  • Some professional bodies – such as the IMI - have an agreement with the tax office that allows their members to claim back the tax on their fees
  • If you have to travel between different work locations in your own vehicle or on public transport, then you can claim for mileage tax relief
  • If your work requires you to stay away from home on a project, then you can claim tax relief for hotel bills and food and drink costs while you are away. This is known as ‘subsistence and accommodation’ costs and comes with an HMRC definition of ‘reasonable’ – not the Savoy, but not the cheapest ‘B and B’ either.

You don’t have to make separate claims for all of these items, you can submit one form which incorporates everything you are entitled to. Many people consider it a good idea to get professional help to ensure they really do get all of their tax overpayment returned to them.

It can be tricky to navigate HMRC’s regulations and maintain effective communication with them – but the cheque you eventually receive makes it all worth it.

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Wendy Hennessey

+44 (0) 1992 511521

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