4 tax saving tips for employees

It can be easy to overlook tax opportunities that can save you money, but here are four little-known tax rules/reliefs that you may be able to take advantage of.

1. Tax relief on mileage claims

You can claim tax relief if your employer pays a mileage rate less than the statutory rates for business trips in your own car (45p per mile up to 10,000 miles in the tax year, 25p thereafter).

For instance, if your employer pays 30p per mile and you have travelled 5,000 business miles, you can claim tax relief on 5,000 miles at 15p, (a total of £750). A basic rate tax payer would receive a refund from HMRC of £150 on this claim, a higher rate taxpayer £300. If you’ve travelled 10,000 miles you claim twice as much as this.

2. Tax relief for temporary workplace meal costs

You can claim tax relief on a fixed lunch allowance of £5 from HMRC if you attend a temporary workplace (some distance from your normal workplace) for a period of more than five hours and your employer does not pay you a lunch allowance / reimburse lunch costs.

For example, if you travel on business to meetings across the country 20 times a year, you could lodge a claim for relief for £5 x 20, i.e. £100 to HMRC. This would equate to a £20 tax refund for a basic rate taxpayer and £40 for a higher rate taxpayer.

3. Company car fuel cards and private usage

If your employer pays for all fuel (private and business miles) in your company car, and you suffer a significant fuel tax charge on your P11D, it may cost you less money to hand back the fuel card and pay for the fuel yourself and claim a mileage rate for business journeys.

If you drove 8,000 private miles a year in a car averaging 40mpg and the fuel costs £1.50 per litre, you would pay £1,193 at the pump. The fuel scale charge on an average car with CO2 emissions of 20% is £5,560 which equates to a tax charge of £2,224 for a higher rate taxpayer. Paying for fuel personally could therefore save around £1,000 per year.

4. Flat Rate Expenses for clothing and equipment

HMRC allows a Flat Rate Expense to be applied to your tax code to provide relief in respect of minor items of clothing or equipment you may need to do your job if you work in specific industries such as agriculture, construction, healthcare and heating. These Flat Rate Expenses are standardised and pre-approved for each qualifying industry sector.

For example, all agricultural employees can claim a Flat Rate Expense of £100. This equates to a tax saving of £20 a year for basic rate taxpayers and £40 a year for higher rate taxpayers.