Job expenses – What do you need to know?

At first glance, managing job-related expenses may seem intimidating due to a myriad of rules and regulations that can easily overwhelm employees.

While not the most exciting subject, understanding expenses is crucial as it can significantly impact your financial health.

Understanding job expenses

Also referred to as work-related expenses, job expenses are costs that employees encounter while carrying out their job duties.

These expenses cover a broad spectrum, including travel costs, expenses associated with working from home, uniform costs and professional subscriptions.

A primary characteristic of these expenses is that they are necessary for performing your job.

Types of job expenses

There are two main categories of job expenses: reimbursable and non-reimbursable expenses.

Reimbursable expenses

These are costs your employee has agreed to refund.

Common examples include:

• Business travel
• Accommodation during business trips

It is crucial to maintain accurate records of these expenses and adhere to your employer’s reimbursement procedure.

Non-reimbursable expenses

These are costs your employer does not compensate for.

Examples include:

• Meals during standard work hours
• Everyday commuting costs

Unless specific tax reliefs cover these expenses, they generally come out of your pocket.

Managing job expenses

While tracking job expenses might appear tiresome, it is an indispensable task.

It aids in effective budgeting by helping you understand where your money is being spent and ensuring you receive accurate reimbursements for any incurred costs.

Thankfully, expense-tracking software, which integrates smoothly with your accounting software can significantly simplify this process.

This technology automates the expense tracking process, minimises the likelihood of errors associated with manual data entry and simplifies the management of financial records.

The software instantly captures and sorts expenses, making it easier to analyse spending habits and make more informed financial decisions.

Moreover, some job-related expenses could be eligible for tax relief, potentially reducing your tax liability.

Tax relief on job expenses

Certain job expenses are eligible for tax relief.

The primary criteria for this relief is that the expense must be entirely and exclusively necessary for carrying out your job duties and you must have paid for them out of your pocket.

Potential tax relief could be claimed on expenses such as:

• Professional fees and subscriptions – If you are required to pay fees to professional bodies or subscriptions to approved professional organisations related to your job, you can claim tax relief on these expenses.
• Home working expenses – If your job requires you to work from home, you can claim tax relief for the additional costs you encounter, like heating or electricity for your workspace. However, claims can’t be made for items used for both private and business purposes, such as rent or internet access.

Claiming relief for uniform, tools and specialist clothing

Tax relief might be available for the expenses associated with repairing or replacing essential work tools (like scissors or an electric drill) and maintaining, repairing or replacing uniforms or specialised attire (like overalls or safety boots).

Tax relief could also be claimed on uniforms. A uniform is specific clothing that signifies your association with a particular profession, such as nursing or law enforcement.

Specialised work clothing, even if it doesn’t specifically represent a particular job, like overalls or safety boots, might also be eligible for tax relief.

However, tax relief cannot be claimed for:

• Initial costs related to purchasing work clothing
• Costs associated with cleaning, repairing or replacing regular work clothes, even if they have a specific design or colour
• The cost of personally laundering your uniform or specialised clothing if your employer provides a laundering service, but you choose not to use it

Understanding and properly managing job expenses is a vital part of maintaining your financial well-being.

For more advice on managing your expenses, get in touch today.