Tax refunds are great, everyone loves a Tax rebate from HM Revenue & Customs. In many situations overpayments of Tax occur without the Tax payer knowing, or even HMRC having any knowledge. Because of this, they never get paid but get swallowed up by the Tax office over time. Why does this happen? The reason […]
Offshore Worker Tax Rebates
Individuals that work offshore and pay UK Tax may be due a Tax refund. This is due to the high level of travelling expenses that they incur, which are commonly not reimbursed by their employers.
How Do I Get Started Making a Claim for Working Offshore?
First you should get all of your paperwork together relating to you working offshore. This would include payslips, P60s, invoices, receipts, vehicles expenses (including MOT certificates showing your mileage). Even bank statements can prove extremely useful in certain situations.
Along with details of your offshore income and expenditure, we will also require details of where you have been working. These details can be gathered from work diaries, from your contractors or employer, from personnel or HR departments. If your contractors are using Vantage software at the rigs, your offshore work records should be readily available.
When making a Tax relief claim, the more information you have at hand, the easier it will be to not only assess your chances of making a claim, but also calculating the amount to be claimed.
How Far Can I Go Back?
Offshore Tax relief claims can be made for up to four Tax years. At the time of writing this means you can go back up to 6th April 2013. This means you can claim Tax rebates for the following Tax years:
- Year ended 5th April 2014
- Year ended 5th April 2015
- Year ended 5th April 2016
- Year ended 5th April 2017
Unfortunately relief cannot be claimed before 6th April 2013.
If you have already made a claim before, you can make another claim, and you should do so. The relief you claim is not automatic and should be done each year.
Case Study - Lee Hepburn
Lee Hepburn is contracted as a Base Engineer at numerous sites around the UK. His typical shifts for working offshore would be two weeks on then two weeks off. His contractor does not reimburse any travelling expenses but instead it is included in his day rate.
Usually when Lee is required to travel a fair distance, and he is due to leave UK mainland early the next day, it would be common for him to book a hotel the night before.
Lee collected all of his income and expense details for QuickRebates, and a substantial claim was made on his behalf for his travelling expenses whilst working offshore.
Am I Entitled to Make a Claim for Working Offshore
HMRC review each Tax rebate claim on a case by case basis. And as each situation is different to each other, there is no definitive answer, but if you satisfy the following conditions, the chances would be very high:
- You travel to temporary workplaces or rigs (less than 24 months)
- Mileage and other travelling costs are paid personally
- You are required to clean your own work uniform
- You have paid hotel costs during your performance of the contract
Remember, you can make a claim for past employment contracts, even if it was a short term post, or you were made redundant.
Work Clothing Costs for Working Offshore
Are you required to clean, maintain or even repair your work clothing at your own expense? HMRC recognises this as a qualifying expense and is a available for Tax relief.
The amount that be claimed each year can be substantial and in some cases, Tax relief of costs can be recovered up to 45%.
Even if you have claimed this before, it’s an annual claim and should be made every year. If HMRC do not know about your expenses, they will not give you a Tax rebate.
Purchasing Tools & Equipment for Working Offshore
For some offshore workers, they may be required to use some of their own tools and equipment which can be extremely expensive.
HMRC allows theses costs to be deducted against your offshore earnings when calculating your Taxable income for the year. With the maximum Tax relief being at the rate of 45% even just spending £1,000 on various tools can equate to a £450 Tax rebate.
Claims can also be backdated for four years, even if you no longer work in that employment or no longer have the tools in your possession.
Other Expenses Incurred Working Offshore
For those individuals that work offshore and looking to maximise Tax relief will be pleased to know that you can not only claim Tax back on mileage costs, but also areas such as:
- Rail cards (including season tickets)
- Hotel and taxi costs
- Food when working away (in certain circumstances)
- Purchase, maintenance and upkeep of tools and equipment
- Trade subscription and membership costs
Contact us today to find out more.
All of the necessary UK Income Tax and National Insurance rates and allowances for the Income Tax year 2016/17 – fiscal year ending 5th April 2017.
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