Changes to Fixed Rate Expense Allowances (FREAs)

HMRC is simplifying the way FREAs are organised and increasing the current rates. As a result, most employees entitled to a FREA will see an increase in their tax relief when the tax codes for 2008-09 are issued as part of the annual coding cycle.

FREAs are flat rate allowances linked to particular occupations to cover the cost of employees buying and cleaning uniforms and protective clothing. They save employees the trouble of keeping records and making individual claims. Relief is normally given through the tax code. From 2008-09 the number of different FREAs will reduce and be replaced by a limited number of bands, each covering a range of occupations. The existing occupations will continue to be covered by a FREA but there will only be 6 different rates.

Current FREAs will move to the new bands as shown on the table below with each occupation moving to the band immediately above its current FREA rate. As a result, any employee with FREA in their tax code will receive a new code as part of the annual coding cycle in January giving them the increased tax relief for 2008-09.

In future when an increase to a FREA is justified, all FREAs will be increased at the same time and linked to the annual coding cycle in January. Making the change in this way means we will not have to trouble individual employers with requests for information in order to increase FREAs in future.

The new FRE amounts for 2008-09 are as follows.

2007-08 - Old rate between	2008–09 - New rate
1 to 45	60
46 to 60	80
61 to 80	100
81 to 100	120
101 to 130	140
131 to 165	165

We will review the bands at regular intervals to keep them up to date according to changes in costs.