What Tax Deductions can I Claim?

An employee or director of a firm can claim tax deduction or relief for business expense incurred. This includes travel expenses, specialist clothing required for work, tools and professional fees or subscriptions. These expenses are known as ‘tax-deductible’ and can only be claimed if they were necessary for an employee or director to go about his or her job. As mentioned, this tends to be for travel expenses but can include other direct expenses also. An employee or director cannot claim tax deductions on expenses the employer has reimbursed them and agreed a dispensation with HM Revenues and Customs.Employees and directors may be eligible for tax deduction or relief on business mileage or fuel if they use their own car for work or pay for the fuel in a company car. Tax deduction can only be claimed on business travel to, from and between work places and not on private travel.

A person is only entitled to claim the so called ‘Mileage Allowance Relief’ if their employer does not pay them a mileage allowance or a mileage allowance of less than the approved amount. The approved amount for a car travelling less than 10,000 miles a year is 40p per mile. The allowance differs for vans, bicycles and public transport. For an employee to work out the Mileage Allowance Relief they can claim they need to add up their business miles traveled in the tax year and multiply this by the necessary approved mileage rate. By deducting this amount by any mileage allowance payments received from their employee, the difference can be made up by Mileage Allowance Relief. An employee must keep records of the dates and distance of all business travel in order to claim Mileage Allowance Relief.If a person is self employed further deductions are available to them. A self employed person is likely to incur a number of expenses, which are all classified into different types of expenditure;
capital, business or private.

Capital expenditure is expenses incurred when purchasing or improving business assets. Some tax deductions are available for some forms of capital expenditure and there are special rules on how they can be claimed.Business expenditure, as long as it is solely for the business, is open for tax deductions. Common business expenditures include travel expenses, purchasing stock, payroll costs, the cost of hiring or up keeping premises, repairs, administration and professional fees. Finally, there are a number of people who are entitled to special tax deductions.Farmers, gardeners and artists can reduce their tax bill by using their average profits over two years when filling out their tax forms. People who have a lodger in their home can claim ‘Rent a Room‘ relief, which deducts tax from the rent the lodger pays, up to a certain amount. Foster carers can also claim some tax deductions if the income from foster care is below a certain amount. Any profits are also subject to tax relief by claiming ‘Rent a Room’ relief or claiming a fixed
expenses deduction.

There are time limits on when a person can claim tax deductions. Tax deductions for a tax year generally must be claimed by 5th April 4 years on. For example, tax deductions for the tax year ending 5th April 2010 must be claimed by 5th April 2014.

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