The Covid-19 pandemic forced large numbers of employees to work from home for the first time. Having made the transition to home working, post pandemic, many employees have continued to work from home some or all of the time.

Household expenses

Employees who work from home may incur costs as a result, such as increased household bills. The tax legislation allows employers to make a tax-free payment of £6 per week (£26 per month) to employees who work from home at least some of the time to help them meet the costs. The payment can be made tax-free regardless of whether the employee works from home through choice.

If the employer does not contribute towards the costs of additional household expenses, the employee may be able to claim tax relief. During the Covid-19 pandemic, the conditions were relaxed and employees who were required to work from home during the pandemic were able to make a claim of £6 per week for 2020/21 and 2021/22 for the full tax year (even if they returned to the office for some of the year). However, the easement came to an end on 5 April 2022, and for 2022/23 onwards relief is only available where the employee is required to work from home (either by the employer or the nature of the work), but not where the employee has the option to work at home or at the employer’s premises but chooses to work from home.

Hybrid working arrangements are attractive because of the flexibility that they offer. However, the choice element will limit to ability to claim a deduction for household expenses. Requiring the employee to work from home on, say, one specified day of the week will open the door to a claim.

Homeworking equipment

Where an employee works from home, depending on the nature of their job, they may need equipment to enable them to do so. Where the employer provides homeworking equipment, no tax liability arises in respect of that equipment.

During the Covid-19 pandemic, the rules were relaxed so that where an employee purchased homeworking equipment, the cost of which was later reimbursed by the employer, the reimbursement was not taxed. If the employer did not reimburse the cost, the employee could claim a tax deduction.

However, this easement ended on 5 April 2022. The strict statutory rules now apply, and as employees are not able to claim a deduction for capital expenditure (such as the cost of a computer), where this cost is reimbursed by the employer, the reimbursement will be taxable.

However, a deduction is allowed for revenue expenses wholly, necessarily and exclusively incurred in undertaking the employment duties, and any reimbursement of those costs can be made tax-free.

The High Income Child Benefit Charge (HICBC) is a tax charge that claws back payments of child benefit where the recipient or the recipient’s partner has income of at least £50,000 per year. Where both the recipient and their partner have income of this level, the charge is levied on the one with the higher income. The scope of the charge may mean that it falls on someone who did not receive the benefit and who is not a biological or adoptive parent of the child/children in respect of which the benefit was paid.

For 2022/23, child benefit is payable at the rate of £21.20 for the eldest child and at the rate of £14.45 per week for subsequent children.

The HICBC applies where the recipient of the benefit or their partner has ‘adjusted net income’ of at least £50,000 a year. This is taxable income before personal allowances, but after gift aid and pension payments.

The HICB charge claws back 1% of the child benefit paid for every £100 by which adjusted net income exceeds £50,000. Where adjusted net income is £60,000 or above, the HICBC is equal to the child benefit paid for the tax year.

Basic rate taxpayers and HICBC

Despite its name, a person can be a basic rate taxpayer and still fall within the scope of the HICBC.

For 2022/23, a person in receipt of the standard personal allowance of £12,570 with no adjustments will not pay higher rate tax until their income exceeds £50,270. However, the HICBC bites where income exceeds £50,000. A person with income of £50,270 in receipt of child benefit will face a HICBC of 2.7% of their child benefit, despite being a basic rate taxpayer.

Pay the charge

Where the charge applies, the person liable for the charge must complete a self-assessment tax return and pay the charge, with any other tax and National Insurance due under self-assessment, by 31 January after the end of the tax year to which the charge relates.

Stop the benefit

Where income is at least equal to £60,000, the HICBC claws back all the child benefit received in the tax year. Consequently, there is no net benefit to receiving the child benefit, and there is the added hassle of completing the relevant section of the self-assessment tax return and paying the tax. As a result, it may be preferable not to receive the child benefit in the first place.

The recipient can elect to stop receiving child benefit by completing the online form or contacting the Child Benefit Office by phone or by post.

However, child benefit paid for a child under the age of 12 earns National Insurance credits that allow the year to be treated as a qualifying year for state benefit purposes. Consequently, anyone entitled to child benefit should still register for the benefit, even if they elect not to receive it, in order to benefit from the associated National Insurance credits. This is particularly important where the recipient does not pay sufficient National Insurance for the year to be a qualifying year, but their partner would be liable for the charge if the child benefit is paid.

Unincorporated businesses and companies planning capital expenditure projects need to be aware of some time-limited reliefs. Timing capital expenditure to benefit from these reliefs can be financially beneficial.

Annual investment allowance

The annual investment allowance (AIA) is available to both unincorporated business and to companies. It provides immediate 100% relief against profits for qualifying capital expenditure on plant and machinery in the accounting period in which the expenditure is incurred up to the available AIA limit. The limit remains at its temporary limit of £1 million until 31 March 2023, reverting to its permanent level of £200,000 from 1 April 2023.

Most items of plant and machinery qualify for the AIA; the main exception being expenditure on cars.

Where the accounting period is 12 months in length and falls wholly within the period from 1 January 2019 to 31 March 2023, the AIA limit for the period is £1 million.

Where the period spans 31 March 2023, the AIA limit for the period is:

 x/12 x £1 million + y/12 x £200,000,

where x is the number of months in the period prior to 1 April 2023 and y is the number of months in that period on or after that date.

Consequently, the AIA limit for the year to 30 September 2023 is £600,000 (6/12 x £1 million + 6/12 x £200,000).

However, not all expenditure in a period spanning 31 March 2023 is equal. Where the expenditure is incurred before 1 April 2023, qualifying expenditure up to the limit for the period will be eligible for the AIA. However, a further cap applies if the expenditure is incurred in the period but after 31 March 2023. This is y/12 x £200,000. Only expenditure up to this cap qualifies for the AIA. Relief for expenditure in excess of that qualifying for the AIA is given as writing down allowances.

So, if a business prepares accounts for the year to 30 September 2023, its AIA limit for the year is £600,000. It can claim the AIA for expenditure of up to £600,000 if the expenditure is incurred before 1 April 2023. However, if it incurs the expenditure after 1 April 2023, only £100,000 qualifies for the AIA, whereas, if the business accelerates the expenditure to incur it on or before 30 September 2022 (so that it falls within the year to 30 September 2022), it can benefit from the AIA for expenditure of up to £1 million.

Where significant capital projects are planned, undertaking them sooner rather than later will mean maximum advantage can be taken of the temporary AIA limit.

Super deduction for companies

Companies can also benefit from a super-deduction of 130% of the expenditure when calculating profits. This is available in respect of qualifying expenditure on plant and machinery which would otherwise be eligible for main rate writing down allowance, subject to certain exceptions, the main one being expenditure on cars.

To qualify, the expenditure must be incurred in the period from 1 April 2021 to 31 March 2023.

The super-deduction is only available to companies; unincorporated businesses do not qualify. Where available, the deduction rate trumps that under the AIA. However, the expenditure must be incurred by 31 March 2023 to qualify.

50% first-year allowance

Companies can also benefit from a 50% first-year allowance for qualifying expenditure (excluding cars) that would otherwise benefit from special rate writing down allowances. This allowance can be useful if the AIA limit has been used up. Again, the expenditure must be incurred by 31 March 2023.

The corporation tax rules are changing from 1 April 2023, and the amount that a company will pay will depend on the level of its profits, and also whether or not it has any associated companies.

Briefly, from 1 April 2023, companies with profits below the lower limit will pay corporation tax at the small profits rate of 19%, while companies whose profits exceed the upper limit will pay corporation tax at the main rate of 25%.

Where profits fall between the lower limit and the upper limit, corporation tax will be paid at the rate of 25%, as reduced by marginal relief.

For a company with no associated companies, for a 12-month accounting period the lower limit is £50,000 and the upper limit is £250,000. Where a company has associated companies, the limits are divided by the number of associated companies plus one. The limits are also proportionately reduced where the accounting period is less than 12 months.

The following table shows the limits for companies with zero to five associated companies:

Number of associated companies	Lower limit	Upper limit
0	£50,000	£250,000
1	£25,000	£125,000
2	£16,667	£83,333
3	£12,500	£62,500
4	£10,000	£50,000
5	£8,333	£41,667

What is an associated company?

A new definition applies from 1 April 2023 to determine whether a company is an associated company for the purposes of the new corporation tax rules. For these purposes, a company is an associated company of another at any time when:

• one of the two has control of the other; or
• both are under the control of the same person.

However, a company is ignored in determining the number of associates that a company has if it has not carried on a trade or business at any time in the accounting period or if it was an associated company for only part of the accounting period and has not carried on a trade or any business during that part of the accounting period.

Meaning of ‘control’

The definition of ‘control’ is that which applies for the purposes of the close companies rules.

Under this definition, a person is treated as having control over a company if that person exercises, is able to exercise or is entitled to acquire direct or indirect control of the company’s affairs. In particular, a person is treated as having control of a company if the person possesses or is entitled to acquire:

• the greater part of the share capital or issued share capital of the company;
• the greater part of the voting power in the company;
• so much of the issued share capital of the company as would, on the assumption that the whole of the income of the company were distributed among participators, entitled that person to receive the greater amount so distributed; or
• such rights as would entitle that person, in the event of the winding up of the company or in any other circumstances, to receive the greater part of the assets of the company which would then be available for distribution among the participators.

If two or more persons together satisfy any of the above tests, then they are treated as having control of the company.

Rights that the person is entitled, or will be entitled, to acquire at a future date are taken into account. Certain rights and powers may also be attributed to a person in determining whether they have control, including those of companies that the person (alone or with an associate) control and those of their associates.

Example

Freya has two personal companies, F Ltd and G Ltd. She is the sole shareholder in each. Both companies are under her control and consequently are associated with each other.

In preparation of the introduction of MTD for income tax, which comes into effect from 6 April 2024 for unincorporated businesses and landlords with trading and property income of more than £10,000 the basis period rules are being reformed.

At present, once an unincorporated business is established, it is taxed on the current year basis. This means that the profits which are taxed for a particular tax year are those for the accounting period that ends in that tax year. For example, if an established business prepares it accounts to 30 June each year, for 2022/23 it will be taxed on the profits for the year to 30 June 2022, as this is the year that ends in the 2022/23 tax year.

However, from 2024/25 a business will be taxed on its profits for the tax year, i.e. the profits from 6 April and the start of the tax year to 5 April at the end of the tax year. Where accounts are prepared to 31 March (or to a date between 1 and 4 April), the accounting period is deemed to correspond to the tax year. If the accounts are prepared to a different date, it will be necessary to apportion the profits from two accounting periods to arrive at the profits for the tax year. For example, if accounts are prepared to 30 June each year, the profit for 2024/25 will comprise 3/12^th of the profits for the year to 30 June 2024 and 9/12^th of the profit for the year to 30 June 2025. This will mean that the business will need the accounts for the year to 30 June 2025 in order to finalise their tax liability for 2024/25. Under the current year basis they only need the accounts to 30 June 2024.

To move from the current year basis to the tax year basis, the tax year 2023/24 is a transitional year. In this year, the profits for the year ending in 2023/24 are taxed, together with any profits for the period from the end of that period to 5 April 2024. If there are any overlap profits to be relieved, these will be deducted. This may result in more than 12 months’ profits being taxed in 2023/24. However, spreading relief will tax the additional profits over a five year period, unless the business elects otherwise.

Move to a 31 March year end?

Going forward, life will be simpler if the business prepares accounts to 31 March (or to 5 April). Where the accounting date is other than 31 March, it may be beneficial to change to a 31 March accounting date ahead of the move to the tax year basis. This could be done in 2022/23 or in the 2023/24 transitional year.

Where the move is made in 2022/23, the normal rules on change of accounting date apply. The first accounts to the new date must not be for a period longer than 18 months and the change must be made for commercial reasons. Notice of the change of accounting date must be given in the self-assessment tax return. Depending on how the dates work, any unrelieved overlap profit may be relieved or overlap profits may arise. Any overlap profits created on a change of accounting date will be relieved in the 2023/24 transitional year.

Alternatively, the move to a 31 March accounting date could be made in the transitional year (2023/24). Making the change in this year would avoid the creation of overlap profits and provide access to spreading relief.

If a change of accounting date is not made prior to 2024/25, it is possible to change the accounting date once the tax year basis is up and running. This will have minimal consequences and remove the need to apportion profits from two periods to arrive at the profits for the tax year.

If you are an employee and you personally incur expenses in carrying out your job, you may be able to claim tax relief for those expenses. Relief is only available for expenses that you must incur, rather than those that you choose to incur, and the expenses must be incurred wholly, necessarily and exclusively in performing the duties of your job. Relief is not available for expenses that you incur to enable you to be able to do your job, such as childcare costs, nor it is available for private costs. Separate tests apply to travel expenses – relief is available for business travel but not private travel, which includes the ordinary commute.

Typical expenses

Although the expenses that an employee may incur will vary depending on the nature of their job, popular expenses for which claims may be made include travel costs, additional costs of working from home, professional fees and subscriptions, work clothing and tools and equipment.

Travel expenses

If you have to travel for your job and your employer does not meet the cost of the associated travel expenses, you may be able to claim a deduction. Typical travel expenses include public transport costs, parking fees, congestion charges and tolls and, where you travel by car, mileage costs. For most expenses the deduction is the amount that you spent. If you use your own car, you can claim a mileage allowance of 45p per mile for the first 10,000 business miles in the tax year, and 25p per mile thereafter. If your employees pays you an allowance, but it less than the approved rates, you can claim a deduction for the difference. If you have a company car, you can claim a deduction for fuel based on HMRC’s advisory fuel costs. If you do not want to use the flat rates, you can instead claim a deduction based on the actual costs, but this will involve more work.

In the event that you have to stay away overnight, you can claim the cost of any overnight accommodation and food and drink.

Working from home

If you are required to work from home, you can claim a fixed rate deduction of £6 per week (£26 per month) for additional household costs incurred as a result of working from home. If preferred, you can claim the actual amount of extra costs that you have incurred from working from home, but you will need bills and receipts to support your claim.

Professional fees and subscriptions

If you have to pay a professional fee to be able to do your job and you meet the cost yourself, you can claim a deduction. You can also claim a deduction for any subscriptions that you pay to approved professional bodies or learned societies that are on HMRC’s list.

Work clothing and tools

If you are required to wear specialist clothing to do your job, you may be able to claim the cost of cleaning, repairing or replacing that clothing. However, you are not allowed a deduction for the initial cost.

Similarly, you can claim a deduction for the cost of replacing or repairing any small tools that you need to do your job and which you provide yourself, but not the initial cost of those tools.

Making the claim

If you need to complete a self-assessment tax return (which may be the case if you also have income from employment or investment income), you can make the claim in your tax return.

If you do not need to complete a tax return, you can either make the claim online or by post on form P87.

Online claims can be made using the online service on the Gov.uk website. You will need to sign in using your Government ID and password. You can make a claim for multiple tax years, and also for up to five different jobs. It is advisable to make sure that you have all the information that you need before starting the claim. Once you have made the claim, you will be given a reference number which you can use to track the progress of the claim.

You can also make a claim by post on form P87, which is available on the Gov.uk website. Again claims can be made for multiple tax years and also for up to five jobs. From 7 May 2022, HMRC will only accept postal claims on form P87; previously claims could be made by letter.

Although the National Insurance rates and thresholds for 2022/23 had already been set, at the time of the Spring Statement in March 2022, the Chancellor announced increases in the primary threshold which would align the starting point for National Insurance with the personal allowance from 6 July 2022. However, as the increase does not take effect until part way through the 2022/23 tax year, the two not fully aligned until 2023/24. The lower profit limit for Class 4 contributions was also increased.

Employees

Employees pay primary Class 1 National Insurance contributions on their earnings to the extent that these exceed the primary threshold. For 2022/23, contributions are payable at the main rate of 13.25% on earnings between the primary threshold and the upper earnings limit, and at the additional rate of 3.25% on earnings in excess of the upper earnings limit. Employees are treated as having paid contributions at a notional zero rate on earnings between the lower earnings limit and the primary threshold. This has the effect of ensuring that the year is a qualifying year for state pension purpose if the employee has earnings at least equal to 52 times the weekly lower earnings limit.

The lower earnings limit is £123 per week (£533 per month; £6,396 per year) and the upper earnings limit is set at £967 per week (£4,189 per month; £50,270 per year) for 2022/23.

The primary threshold was initially set at £190 per week (£823 per month; £9,880 per year). These thresholds now only apply from 6 April 2022 to 5 July 2022. From 6 July 2022, the primary threshold is aligned with the personal allowance, and from 6 July 2022 to 5 April 2023 is set at £242 per week (£1,048 per month; £12,570 per year). As the increase takes effect three months after the start of the 2022/23 tax year, the annual primary threshold for 2022/23 is £11,908. This will be of relevance to directors with an annual earnings period. The increase in the thresholds does not affect any liability for primary contributions for any tax week commencing before 6 July 2022.

As a result of the increase in the primary threshold, employees will pay less National Insurance from July onwards. There is no change to the secondary thresholds.

Case study

Imogen is paid £2,000 per month.

For April to June 2022 inclusive, she pays primary contributions of £155.95 per month (13.25% (£2,000 – £823)).

However, from July 2022, her monthly primary contributions fall to £126.14 (13.25% (£2,000 – £1,048)).

The increase in the primary threshold means that from July she is £29.81 better off each month.

Employment allowance

The employment allowance reduces the secondary contributions payable by the employer. The allowance is set at £5,000 for 2022/23, having been increased by £1,000 following the Spring Statement. Eligible employers should remember to claim the allowance.

The self-employed

The starting point for Class 4 contributions is aligned with the primary threshold for Class 1 purposes. To keep the alignment in light of the increase to the primary threshold from July 2022, the lower profits limit for 2022/23 has been increased from £9,880 to £11,908. The increase applies from 6 April 2022.

When you start a business, you will need to incur costs before you are able to start trading. Did you know that you are able to claim tax relief for these?

Relief is available for unincorporated businesses for income tax purposes and also for companies for corporation tax purposes.

Typically, you may need to incur expenses securing business premises and kitting them out, on buying stock, on recruiting staff, on setting up a website, on IT and on marketing the business.

In the same way that relief is given for business expenses incurred once the business is up and running, relief is also available for those incurred before the business commenced.

The relief

The general rule is that relief is available for business expenses that are incurred wholly and exclusively for the purposes of the business. Relief is available for revenue expenses regardless of whether the cash basis or the accruals basis is used. However, the way in which the relief is given for capital expenditure depends on the way in which the accounts are prepared – where the cash basis is used, capital expenditure can be deducted in accordance with the cash basis capital expenditure rules. Otherwise, relief may be available in the form of capital allowances.

The pre-trading relief rules allow relief for expenses that were incurred in the seven years prior to the commencement of the trade to the extent that the expenses would have been deductible had the expenditure been incurred once the business was up and running. Pre-trading expenses are treated as if they were incurred on the day on the first day of trading, and are deducted in computing the profits for the first period of account.

No deduction is given for the cost of stock under the pre-trading expenses rules. Stock purchased prior to commencement will form opening stock, and relief against profits will be given for stock sold in the first accounting period.

Where the expenditure is capital in nature and qualifies for capital allowances, allowances are given as if the expenditure was incurred on the first day of trading.

Case Study

Tilly opens a tea shop and starts trading on 1 May 2022. She operates as an unincorporated business.

In the nine months prior to opening the business, she incurs the following expenses:

• rent — £1,000;
• staff costs — £2,000;
• stock — £4,000;
• travel expenses — £850;
• advertising — £3,000
• website — £1,200
• shop fittings — £12,000
• laptop — £500.

Under the pre-trading rules, the rent, staff costs, travel expenses, website, and advertising costs are treated as if they were incurred on 1 May 2022. They are deducted in calculating her profits for her first accounting period.

If she prepares her accounts under the cash basis, she can also claim a deduction for the laptop. If the accruals basis is used, she can claim capital allowances (including the annual investment allowance): the expenditure is treated as incurred on 1 May 2022.

Relief for the cost of the stock is given in the first accounting period.

To help companies realising losses as a result of the Covid-19 pandemic, the loss relief rules were amended to provide for an extended carry-back window. Where companies are making a claim for relief under the extended carry-back rules, the claim can be made online rather than waiting until the company tax return is filed.

Extended relief

Under the normal rules, a company that incurs a trading loss can set that loss against total profits of the same accounting period. Where the loss is not relieved in this way, it can either be carried back and set against total profits of the previous 12 month period, as long as the company was carrying on a trade in that period, or carried forward and set against future profits of the company. If the company ceases trading, a claim for terminal loss relief can be made, allowing the loss to be set against profits of the previous three years.

The 12-month carry-back window was extended to three years in respect of losses for accounting periods ending between 1 April 2020 and 31 March 2022. Where a loss is carried back under the extended rules, it must first be set against profits of a more recent year before it is set against profits of an earlier year. The amount that can be relieved under the carry-back provisions is capped at £2,000,000 for all accounting periods ending in the period from 1 April 2020 to 31 March 2021. A separate cap of £2,000,000 applies to losses of accounting periods ending between 1 April 2021 and 31 March 2022. The claim is limited to trading losses (and excludes capital losses). Losses which are carried back one year under the usual rules are not subject to the £2,000,000 cap – it only applies to losses carried back two or three years.

Making a claim under the extended carry back rules can be very beneficial and may generate a much-needed tax repayment for companies facing cash flow difficulties as a result of the impact of the Covid-19 pandemic.

Making the claim

As with the usual carry back claim, the claim can be made in the company tax return. This must be filed no later than 12 months from the date on which the accounting period ends.

However, there is also an option to make a claim for extended loss relief online. This can be done on the Gov.uk website.

Making an online claim can be advantageous as it can speed up the repayment. The claim can be made as soon as the loss-making accounting period has ended – there is no need to wait until the company tax return is filed.

Case Study

Food Ltd runs a small restaurant and bar. The company prepares accounts to 31 March each year. It was badly affected by the pandemic, realising a loss of £60,000 for the year to 31 March 2021 and a loss of £35,000 for the year to 31 March 2022.

Prior to the pandemic, it had made profits as follows:

• Year to 31 March 2020: profit £50,000.
• Year to 31 March 2019: profit £80,000
• Year to 31 March 2018: profit £40,000

The company makes a claim under the normal rules to carry back £50,000 of the loss of the year to 31 March 2021 to the previous year (the year to 31 March 2020), and makes a claim under the extended rules to carry the remaining loss of £10,000 back against the profits of the year to 31 March 2019, reducing them to £70,000. The combined claims generate a tax repayment of £11,400 (£60,000 @ 19%).

The company cannot carry the loss of £35,000 for the year to 31 March 2022 back one year -as there are no profits for the year to 31 March 2021. It makes a claim under the extended carry-back rules. As the profits for the year to 31 March 2020 have been eliminated by a previous claim, the company can carry the loss of £35,000 and set it against the remaining profits of £70,000 for the year to 31 March 2019 (the earliest year to which the loss can be carried back). This reduces the profits of that year to £35,000, and generates a repayment of £6,650 (£35,000 @ 19%).

The claim can be made online from 1 April 2022 onwards.

A lot of time and paperwork can be saved by claiming expenses using the simplified rates, rather than recording and deducting actual costs. However, if the deduction is considerably higher using actual costs, the additional time investment may be worthwhile. Given current high cost of fuel, where mileage is high, a deduction based on actual costs may be preferable.

Use of the simplified rates is optional and is available to sole traders and partnerships that do not have any corporate partners.

Motor vehicles

Businesses can claim a fixed rate per business mile deduction for the vehicle expenses. The fixed rate deduction covers the cost of buying, running and maintaining the vehicle (including the cost of fuel, oil, servicing, repairs, insurance, VED and MOT). The fixed rates per mile are as follows:

Type of vehicle	Flat rate per business mile
Cars and goods vehicles: First 10,000 miles Subsequent business miles	45p per mile 25p per mile
Motorcycles	24p per mile

Once a business elects to use the flat rates, they must continue to do so while the vehicle remains in the business. Capital allowances cannot be claimed where the simplified rates are used and if capital allowances have been claimed in respect of the vehicle in question, it is not possible to use the flat rates.

Use of home

It is also possible to claim a fixed rate deduction for the use of home for the purposes of the business. The flat rate provides an allowance for additional household running incurred as a result,  and covers the additional costs of cleaning, heat, light, power, telephone, broadband etc.

The deduction is based on the total number of business hours spent working in the home on core business activities in the month and is as follows:

Number of hours spent on core business activities	Flat rate per month
25 or more	£10
51 or more	£18
101 or more	£26

Core business activities are providing goods or services, maintaining business records, marketing and obtaining new business.

Case study

Betty is a dog groomer. She provides a mobile service and also works from home. In 2022/23 she spent 60 hours a month working in her home on core business activities and she drove 15,000 business miles.

To save the work involved in determining the actual additional costs, she claims flat rate deductions in respect of the use of her car and her business use of home.

For the car she claims a deduction of £5,750 being 10,000 miles at 45p per mile (£4,500) plus 5,000 miles at 25p per mile (£1,250).

For use of her home she claims a deduction of £18 per month – an annual deduction of £216.

Claiming fixed rate deductions saves the time and effort of keeping records of actual costs and calculating the deductible amount.