Understanding and navigating job expenses

Navigating job expenses can seem daunting at first glance. There are a plethora of rules and regulations that can leave employees feeling overwhelmed.

Expenses may not be the most glamorous topic but it is one of the essential elements that can make a significant difference in your financial well-being.

Defining job expenses

Job expenses, also known as work-related expenses, are a cost that employees incur while performing their job duties.

They encompass a wide variety of expenses such as travel costs, working from home expenses, uniform costs and professional subscriptions.

The main feature of these expenses is that they are necessary for you to do your job effectively.

Job expenses categories

Job expenses can be categorised into two main types: reimbursable and non-reimbursable expenses.

Reimbursable expenses

These are the costs that your employer agrees to refund.

Typical examples include:

  • Business travel
  • Accommodation for business trips

It is essential to keep an accurate record of these expenses and follow your employer’s reimbursement process.

Non-reimbursable expenses

These are costs that your employer does not cover.

Examples include:

  • Daily commuting costs
  • Meals during regular work hours

Unless covered by specific tax reliefs, these costs usually come out of your pocket.

Tracking job expenses

While it may seem like a tedious task, tracking your job expenses is critical.

Not only does it allow you to budget more effectively by understanding where your money is going but it also ensures that you get correctly reimbursed for any costs you have incurred.

Additionally, some job-related expenses may qualify for tax relief, potentially lowering your tax bill.

Tax relief on job expenses

It is possible to claim tax relief on certain job expenses.

The key requirement for this relief is that the costs must be incurred wholly, exclusively and necessarily in the performance of the duties of the employment.

In other words, they must be necessary for you to do your job and you must have paid for them yourself.

You may be able to claim tax relief on costs such as:

  • Professional fees and subscriptions – If you have to pay fees to professional bodies or subscriptions to approved professional organisations, you can claim tax relief on these expenses. The subscription should be related to your job.
  • Home working expenses – If you are required to work from home, you can claim tax relief for the extra costs you incur, such as heating or electricity for your work area. You are not able to claim for things that are used for both private and business uses, such as rent or broadband access.

Claiming relief for uniform, specialist clothing and tools

Tax relief may be eligible for the expenses incurred in repairing or replacing essential work tools (such as scissors or an electric drill) and maintaining, repairing or replacing uniforms or specialised attire (like safety boots or overalls).

Tax relief may also be claimed on uniforms. A uniform is a set of clothing that identifies your affiliation with a particular profession, such as nursing or law enforcement.

You may also be able to claim tax relief for specialised work clothing, even if it does not explicitly denote a specific occupation, like overalls or safety boots.

However, tax relief cannot be obtained for the following:

  • Initial expenses incurred in purchasing work clothing.
  • Costs associated with cleaning, repairing or replacing everyday work clothes, even if they require a specific design or colour.
  • The cost of personally laundering your uniform or specialised clothing if your employer offers a laundering service, but you choose not to utilise it.

Understanding and managing job expenses is an essential aspect of your financial health.

For more advice on managing your expenses and how they impact your business, get in touch today.