Employees bearing the cost of business expenses

Employees are facing comparable pressures to the self-employed. While employers may reimburse certain business expenses tax free, outdated limits and administrative barriers can leave employees covering costs themselves.

Employees required to work from home may have additional household expenses reimbursed by their employer, at a rate of £6 per week, without creating a tax liability. 

Claiming actual costs requires detailed evidence that expenses are wholly attributable to working from home, making the process administratively burdensome and, for some, intrusive. The £6 weekly flat rate, introduced in April 2020, has not been increased despite significant rises in household energy costs, limiting its practical value.

Employees may also claim fixed tax allowances for uniforms, specialist clothing and tools where costs are not reimbursed. However, most rates were last reviewed in 2008, with healthcare worker allowances updated in 2014, leaving them increasingly disconnected from real costs due to significantly higher energy costs.

Where tax reliefs and allowances are not regularly reviewed, they cease to fulfil their purpose. As a result, employees are increasingly bearing the cost of expenses that are essential simply to carry out their work.