Once you are employed you pay tax under PAYE which means your employer deducts tax and national insurance contributions from your wages or occupational pension before paying you wages or pension.
Self-assessment tax return is generally known to be filled by people who are self-employed. However, there are other instances as well in which self-assessment need to be filled by full time employees.
An IT professional approached me telling me that he had received a penalty for not sending the self-assessment tax return. He thought it's a mistake. However, as his annual income was more than £ 100 000, he is required to fill in self-assessment tax return.
Now the question is that what expenses can he include in his self-assessment tax return?
There are several expenses that you can claim, however, for all the expenses that you can claim don't forget to keep the receipts of all the expenses, bills and mileage. HMRC may ask for proof of both the expenses and their business use anytime.
Some of the expenses that you can claim are as follows:
Home Working Allowance: Many IT professionals are required to work from home. If it's part of your contract or you have an agreement with your employer that you can work from home you can actually claim home working allowance. This will help with the increased costs of electricity and gas bills because of the business use. The minimum amount that you can claim is £4 per week which amounts to £208 per annum.
Charitable donations: As a higher rate taxpayer if you have made gift aided charitable donations, you can claim tax relief on them. For example, if you donated £ 100 to a charity, they claim gift aid to make your donation £125. You pay tax at 40% so you can claim back £25 (125*20/100)
For Professional fee and Professional Subscriptions, you can claim tax relief on professional fees, membership fees, subscriptions, etc. if they are necessary or beneficial for your work.
Capital Allowances: You can claim capital allowances for any equipment that you bought for work. HMRC gives the example of filing cabinet. However, it can include any table, chair, laptop that is necessary for the work and the employer has not paid you for that. However, you might not be able to claim a relief if your employer gave you a laptop which you didn't like and you bought another one.
Pension Contributions. If you are a higher rate taxpayer, you may be entitled to Higher Rate Tax Relief on your Pension Contributions. See HMRC Pension Tax Relief.
Rent a Room Relief: If you are an employee who also lets out a room in your home, you can earn up to £7500 tax free under the Rent a Room Scheme. This is halved if you share the income with someone else. HMRC - Rent a room scheme
Mileage allowance: If the mileage allowance that you employer pays is less than the HMRC rate you can claim the balance. The first 10,000 business miles, according to HMRC, can be claimed at a rate of 45p per mile. Over 10,000 miles the allowable HMRC rate drops to 25p per mile. If you are paid less than this by your employer, you can claim the difference on your self-assessment return.
In addition, he will need to declare any income, for example income from investments.
Penalty for Late Filing
You will get a penalty of £100 if your tax return is up to 3 months late. You will have to pay if its later than that. You will also be charged interest on late payments.