Tax refunds on work expenses: can you make a claim?

More than 800,000 taxpayers claimed refunds for work expenses during the 2021-22 tax year, according to the latest figures from HMRC. 

While the average refund was £125, over 70% of people missed out on getting the full amount due because they used a third-party tax refund firm instead of claiming directly for free with the tax office. 

HMRC announced a crackdown on these repayment agents earlier this year, but what work expenses can you claim tax back on and how exactly do you do it without losing a penny? Which? explains the rules and what people need to know about claiming.

What work expenses are eligible for a refund?

Claiming tax relief on work-related expenses means that the tax you'd usually be charged on an item is removed. For instance, if you're a basic rate taxpayer and buy something for work for £100, you can claim for £20 relief – because it's 20% of the total you paid.

While self-employed workers can do this when they file a self-assessment tax return, it works differently if you are employed. 

If you haven't already been reimbursed by your employer – or if you were reimbursed but already paid tax on the amount – you will need to claim tax relief on work-related expenses. These are called tax-deductible expenses and include:

• Uniforms and work clothing.
• Professional fees, union memberships, and subscriptions.
• Using your own vehicle for work-related travel (excluding your commute to work).
• Business trip expenses, including food and drink, parking fees and accommodation.

You may also be able to claim tax relief on some of the expenses incurred as a result of working from home, such as heating, lighting and telephone costs. However, if you're employed, you'll only be able to claim tax relief if your employer hasn't already reimbursed you for the extra costs and you have no other choice of workplace. 

HMRC has a full list of allowable expenses on its website.

• Find out more: tax-deductible expenses

How to claim tax back

You have four years from the end of the tax year in which you paid the expense to claim tax relief. This means you can currently make a claim going back to 6 April 2019.

There are two main ways to claim a tax refund on work expenses directly through HMRC: 

PAYE

If you're only claiming a small amount (less than £2,500), HMRC may refund you in increments through your salary. It will do this by changing your tax code, so you pay less income tax through PAYE.

To arrange for relief through PAYE, you can apply online through gov.uk (you'll need to set up Government Gateway credentials before you begin). Alternatively, you can print and post form P87.

If you've made a claim in a previous tax year, and your total expenses are less than £1,000 – or £2,500 for professional fees and subscriptions – you can phone HMRC on 0300 200 3300.

Self-assessment

If you are self-employed, then you will have to fill in a self-assessment tax return to claim relief on work expenses. However, employed workers are also required to do this if their claim is worth more than £2,500.

Find out how to submit in our guide on how to fill in a self-assessment tax return.

• Find out more: understand your tax code

Beware of tax repayment agents

HMRC is warning customers who are eligible for a tax rebate on work expenses about using a third-party repayment firm to make any claims. While many companies operate transparently, a Which? investigation found that some were charging fees as high as 48% of any rebate you receive.

We ran a nationally representative survey of 4,000 people in November 2022 and found that 18% of people have, at some point, been contacted by a tax refund agent or had come across one of these companies online. When asked if they went on to use a third-party company to claim a tax rebate, a third (33%) said 'yes'.

Earlier this year, HMRC announced a clampdown on these shady, though perfectly legal, practices. One of the most significant steps the tax office has taken is stopping the use of legally binding contracts called ‘assignments’. These grant a company permission to operate with HMRC on your behalf and automatically remain in place, meaning you could be charged again in the future, regardless of whether a firm carries out further work.

Instead, taxpayers who choose to use a repayment agent need to ‘nominate’ that company and customers can cancel the arrangement at any time by contacting HMRC directly. The measure was announced in the Spring Budget and took effect on 15 March 2023, affecting assignments received by HMRC on or after that date. 

A new registration process for agents was also introduced, as well as the need for firms to provide greater evidence of customer consent. 

Unfortunately, the legislation didn't include any new rules on the level of fees that can be charged by these firms. In the meantime, repayment agents continue to sell their services, often hiding their fees in the terms and conditions, website and advertising materials.

The best and safest option is to always go to HMRC's website directly, where you will find lots of free advice and a step-by-step application process. You won’t be charged and the tax office will send all of the rebate. If you have any questions, you can call HMRC’s general enquiries number on 0300 200 3300.

• Find out more: tax free income and allowances

Use the Which? Tax calculator

Try our tax calculator to get to grips with your tax liabilities and allowances. 

It provides clear, no-nonsense explanations about the different types of taxable income, plus suggestions for allowances you might have missed. You can even use the tool to file your return directly to HMRC.