Month: February 2024

If you are an employee and use your own money to buy things you need for your job you can sometimes claim tax relief for the associated costs. Usually, it is only possible to claim tax relief for the cost of items used solely for your work.

You may also be able to claim tax relief for using your own vehicle, be it a car, van, motorcycle or bike. As a general rule, there is no tax relief for ordinary commuting to and from your place of work. The rules are different for temporary workplaces, when the expense is usually allowable, and if you use your own vehicle to do other business-related mileage.

Employers usually make expense payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates published by HMRC. The approved mileage allowance payment rates are available where you use your own car on a business trip. Where the approved mileage rates are used, the payments to you are not regarded as a taxable benefit.

Where an employer pays less than the published rates, the employee can make a tax relief claim for the shortfall using mileage allowance relief. For all cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. The approved mileage rates are 20p per mile for bicycle travel and 24p per mile for motorcycle travel.

There is an additional passenger payment you can receive of 5p per passenger per business mile from your employer. This is available if you carry fellow employees in your car or van on journeys which are also work journeys for your colleagues. 

Have you missed the 31 January 2024 filing deadline for your 2022-23 self-assessment return?

If you have missed the filing deadline, then you will be charged a £100 fixed penalty if your return is up to 3 months late, regardless of whether you owed tax or not. If you do not file before 1 May 2024 then you will face additional daily penalties of £10 per day, up to a maximum of £900 unless you have arranged to pay HMRC.

If your tax return is still outstanding after 6 months, a further penalty of 5% of the tax due, or £300, whichever is greater will be due. And again after 12 months, another 5% or £300 charge, whichever is greater.

There are also additional penalties for paying outstanding tax late. These are 5% of that unpaid at 30 days, 6 months and 12 months. Interest will also be charged on any tax paid late.

You can appeal against any penalties that have been issued by HMRC if you have a reasonable excuse. However, you need to act fast, and the excuse must be genuine and HMRC can of course ask for evidence to support any claim. An appeal must usually be made within 30 days of receipt of the penalty.

If you do not have the necessary funds to make any payments due, you should be pro-active and contact HMRC as soon as possible. Pretending the problem does not exist will not make the problem go away and will likely make matters worse.

The coding out threshold may entitle you to have tax underpayments collected via your tax code when you are in employment or in receipt of a company pension. Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.

If you want to benefit from this opportunity to pay tax due on 31 January through your tax code, then you need to file early. The deadline for the 2022-23 tax year has already passed.

You can pay your self-assessment bill through your PAYE tax code as long as all these apply:

• you owe less than £3,000 on your tax bill (you cannot make a part payment to meet this threshold);
• you already pay tax through PAYE, for example you’re an employee or you get a company pension; and
• you submitted your paper tax return by 31 October or your online tax return online by 30 December.

HMRC will automatically collect what you owe through your tax code if you meet these three conditions unless you have specifically asked them not to (on your tax return). There are circumstances when HMRC will not collect the monies through your tax code, for example, if you do not have enough PAYE income to cover he debt.

If you would like to consider paying your self-assessment bill in this way for the 2023-24 tax year, you have until 30 December 2024 to file your online self-assessment returns to have the monies collected in the 2025-26 tax year starting on 6 April 2025. If you qualify to have your tax debt coded out then this is a good reason to deal with your tax return obligations as soon as you can, after the end of the relevant tax year. 

There is an online tool that allows taxpayers to check if they need to notify HMRC about additional income. The online tool can be found at www.gov.uk/check-additional-income-tax.

This could include money earned from sources such as:

• selling things, for example at car boot sales or auctions, or online;
• doing casual jobs such as gardening, food delivery or babysitting;
• charging other people for using your equipment or tools; and
• renting out property or part of your home, including for holidays (for example, through an agency or online).

In most cases, these types of income are taxable. However, there are two separate annual £1,000 tax allowances for property and trading income. If you have both types of income, you can claim a £1,000 allowance for each. The online tool will indicate if this is relevant.

Where each respective allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared. Taxpayers with higher amounts of income will have the choice, when calculating their taxable profits, of deducting the allowance from their receipts, instead of deducting the actual allowable expenses.