Can I get tax reief on union payments?
Belfast Telegraph Digital's Personal Finance Forum offers expert advice from ASM Horwath directors Alan Curry (left) and Keith Storey.
Q: I am a teacher and I pay an annual subscription to the National Union of Teachers. Can I get tax relief for this? I don’t complete a tax return. JI, Monaghan
Answer: You may get income tax relief for certain business expenses if you are required to pay these expenses in order for you to do your job. Examples of such expenses include:
a) professional fees and subscriptions;
b) tools and specialist clothing (e.g. protective clothing, nurses’ uniforms etc);
c) business mileage or fuel (although normal commuting costs are excluded);
d) capital items required to perform your duties (capital allowances may be claimed); and
e) household expenses when working from home.
In the case of professional fees and subscriptions, you must be a member of the organisation and the organisation must be approved by HM Revenue & Customs (HMRC). A list of approved organisations can be found on HMRC’s website at www.hmrc.gov.uk. The National Union of Teachers is an approved organisation. You cannot get income tax relief on a life membership subscription or if your employer has paid the subscription on your behalf.
There are several ways in which you can claim tax relief for business expenses:
a) you can write to your tax office. If the expenses are greater than £1,000 you will have to complete a Form P87 (see below for more details);
b) you can telephone your tax office. Relief will only be given in these circumstances if the expenses are less than £1,000 (or £2,500 for professional fees and subscriptions), you have claimed them in a previous tax year, HMRC have accepted the claim and HMRC have not already sent you a Form P87 to complete; or c) you can complete a Form P87 and send it to HMRC. You will be required to show how you have worked out the claim on Form P87.
You can get copies of Form P87 on HMRC’s website.
How tax relief is given depends upon the amount of the claim. If the claim is less than £2,500, relief is given through your PAYE tax code. If the claim is for more than £2,500, relief is given through your PAYE tax code and you will be asked to complete a self assessment tax return for the next tax year. HMRC will also check your tax calculation for the previous tax year.
You can claim relief for expenses paid in previous tax years. The deadline for claiming the relief is five years from the 31 October following the end of the year concerned. Therefore, if you have not claimed relief for previous years the cumulative sum can make a claim very worthwhile.
Send your questions to: firstname.lastname@example.org. We will answer as many queries as possible but regret we cannot enter into individual correspondence.
Keith Storey is a Director in ASM Horwath. He is experienced in providing advice to both private and corporate clients. His areas of expertise include pre and post retirement planning, developing individual investment strategies, inheritance tax planning, and life and illness protection plans. ASM Horwath, 20 Rosemary Street, Belfast BT1 1QD (NI 37083) is a company registered in Northern Ireland and is authorised and regulated by the Financial Services Authority, FSA registered number 193758.
Alan Curry is Director of Tax at ASM Horwath. He is a member of both the Institute of Chartered Accountants in Ireland and the Chartered Institute of Tax and his areas of expertise include tax compliance & planning, employment & personal tax, VAT, trusts & estates, retirement planning, inheritance tax, divorce & separation, and capital taxes planning.
Alan and Keith can be contacted at tel: 028 9024 9222.
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