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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Deductions: expenses other than travel: expenses from F to Z

Sections 336 and 367 ITEPA 2003

Many workers are obliged to spend small amounts each year in maintaining or renewing tools and special clothing (as defined by EIM32465) that are necessary to carry out the duties of their employment.

To deal with individual deduction computations for each such employee would be cumbersome and time consuming for taxpayers and for HMRC. So flat rate deductions have been negotiated on a national basis with trade unions. These flat rate deductions apply to the employees in specified occupations listed at EIM32712. Flat rate deductions are only permitted where an expense is necessarily incurred by the employee, see EIM32710.

Flat-rate expense deductions are given by Section 367 ITEPA 2003, the terms of which are explained at EIM32705. There is a table of amounts agreed for 2008/09 onwards at EIM32712.

An employee does not have to be a member of the relevant trade union for the deduction to be given.

The deductions are intended to cover the average expenditure that would be deductible under Section 336 ITEPA 2003. But there is nothing to prevent an employee asking for a deduction in any year for the actual expense he or she has incurred, see EIM32715. This is illustrated by example EIM32735.

For advice on the flat rate expense negotiated separately for:

  • nurses and other health care workers see EIM67210 and EIM66790
  • airline pilots see EIM50050 onwards.

For the amount that may be deducted for laundry costs for employees not covered by a flat rate expense deduction, see EIM32485.

In some cases you may wish to consider introducing a locally agreed deduction. If so, see EIM32725.

The flowchart at EIM32730a sets out the steps to be followed to determine the amount of any flat rate deduction.