Employees who qualify for both schemes are able to choose which scheme they wish to use but families cannot benefit from both schemes at the same time. Pension contributions Contributions by an employer to a registered pension scheme are generally tax and NICs free for most employees. Expense payments An employee can claim tax relief for expenses which are incurred wholly, exclusively and necessarily for business purposes. The main types of expenses are travelling to places for work (but not the normal place of work) and overnight accommodation. Reimbursed expenses An employer would normally reimburse an employee for business expenses. Employers are no longer required to report reimbursed tax deductible business expenses and therefore employees do not need to claim tax relief on these expenses. Mileage claims Many employers pay a standard rate of mileage to all employees who use their own cars for business journeys. HMRC set statutory rates for business mileage which are 45p for the first 10,000 miles in a tax year and 25p thereafter. If the employee is paid for business miles at less than the statutory rates, tax relief is available on the difference. If, however, the employee is paid at more than these rates then the excess is taxable.
If you are paid less than the statutory rates to use your own car for business purposes remember to claim a deduction on your return or write to HMRC to make your claim. Example In 2023/24 Michael travels 14,100 business miles in his own car and is paid 32p per mile by his employer. Michael can claim tax relief on an additional amount of £1,013 ((10,000 x 45p) + (4,100 x 25p)) - (14,100 x 32p).
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