You can claim expenses against tax. But the Revenue makes it hard work

Reducing a tax bill always appeals. One answer - or possible answer - might be to claim a deduction for expenses. But what expenses can we claim? After all working costs a lot - the suit, commuting costs, studying, reading material, tools for the job. Surely all of these are deductible?

The Inland Revenue does not make it easy. The starting point is a rule that says expenses must be "wholly, exclusively and necessarily" incurred for the job. If you are self-employed, the rule is different - just "wholly and exclusively" for the purposes of the business.

Let's start with travel expenses. Travel from home to office is regarded as not in the course of your work but to put you in a position to work. There was a nice case concerning a hospital doctor who used to be phoned at home in emergencies. He gave advice over the phone and then drove in to treat the patient. These travel expenses were deductible: he had started work by giving the advice over the phone.

Now you are at work, perhaps in a suit you'd never wear outside, so that must be allowable? No - it's not "wholly and exclusively". A female barrister argued she only wore her court clothes in court, changing in the Old Bailey locker room. The taxman said she also got warmth and decency from the clothes. Real protective clothing is deductible; a uniform or team kit would also be allowable, though these would normally be provided by the employer.

What about reading material? This is more promising: professional magazines and the like may well qualify for a deduction though you will have to show they are necessary for the job if you are an employee. The taxman's view will be that your employer would provide them if they really were necessary. It may be easier to prove your case as self-employed but the dual purpose is always hovering.

If you are studying, you may well feel that those study costs are for the job. But the taxman will usually regard them as personal or at least personal in part. Take yourself off to a course to improve yourself and you'll rarely get a deduction against your employment income, though again the self-employed may get a deduction if the course is linked to their business.

A job might entail many things. A West End bank manager once argued he had to join a West End club for business connections. But that fell foul of the wholly and exclusively.

By now you may be getting depressed. Is nothing allowable? The truth is that for the employee, little is. Professional subscriptions are one example; tools, another. But the self-employed are usually better off, just as the employer is. Although the wholly and exclusively hurdle is still there, the Inland Revenue are usually reasonable in agreeing what is deductible. If you're working from home, some apportioning of the house costs may be acceptable. If you set aside a room as an office, claim a proportion of the house heating, lighting and council tax.

The tip is to think - what do you really use in the business? One case I had was for somebody who did catering from home: she claimed the costs of the microwave because that was for her business. Be reasonable in claims, but there's no harm trying.

John Whiting is a tax partner at Price Waterhouse

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