What staff employed in UK aviation need to know about tax.
How long will your career be in aviation? 10 years, 25 years or longer?
No matter which company you work for you will always have the UK taxman as your silent partner sharing your wages, and to some extent your success but he is lucky enough not to share the years of study and the long hours in the cabin, flight deck or hangar. It is well known that most employees in any workplace pay too much tax and this mostly due to the complexities of any tax system. Fortunately, the UK tax system is not as complex or as harsh as some near European neighbours.
So if the answer to my question is even just 10 years you will pay over £10,000 extra tax if you default to doing nothing. This being the case, we all need to know where to start with our own tax.
For you as an employee in UK aviation and living in the UK you have 2 routes. One is a really simple way to pay less tax and the other will probably save you more money in tax. Your choice may depend on how you value your time, how much you earn, how much you reckon you’ll save in addition and, if you choose this second option, whether you have an accountant who really knows what they are doing in this field i.e. a specialist who’s job it is to save you more money in tax than their fee.
Option 1: If you don’t like the sound of accountants and you don’t want any hassle at all this is the route for you. Ring the tax man on 0300 200 3319 with your National Insurance number to hand and get the FRE (Flat Rate Expenses) allowance added to your tax code. Through this the tax man offers a way to save employed pilots £1,022 this year and employed cabin crew £720 this year without having to keep any receipts or prove anything. This allowance is to cover things like the costs of replacing uniform, dry cleaning, aviation medicals, recurrent training and licence renewals that aren’t covered by your employer.
Lastly, and perhaps most interestly if you are going for option 2 below and you haven’t been keeping those receipts, you can claim back the FRE allowance for all the years you have been working! A back tax bonanza.
Option 2: Accountants are not just for the self employed engineer or pilot. If you are simply happy to keep your receipts, log your mileage and find a specialist accountant you get on with you will save lots of money in tax. This method involves getting a bit of knowledge yourself (don’t worry – not too much) so you can tell your accountant what you spend pursuing your aviation profession each year.
So what do you need to know to keep your accounts as an employee? We have decided to dedicate a whole page to this at page coming soon as income taxation and our allowances as aviation employees can change each year and the subject a little too big to cover well here.
So I hope you can embrace or maybe even already embrace one of the options above. Tax is a fact of life but it doesn’t actually have to be that taxing. After all, if you passed your last proficency check OK, keeping more of your money in your wallet by taking small actions and getting some tax knowhow should be easy!