Tax, Payroll & Accountancy Services For Aviation Workers

If you’re an airline pilot, working as a contractor may seem like an attractive option.  The question is, is it right for you? Let’s take a closer look at the benefits and challenges of working as an airline pilot contractor, so you can make an informed decision.

While being a contractor may provide flexibility in terms of work schedule and location, it also means you’re responsible for your own insurance, benefits, and retirement savings. Additionally, airline pilot contractors may not receive the same level of job security or seniority as traditional employees which can affect their ability to bid for preferred routes or schedules.

However, contractors generally have higher earning potential than traditional employees as they’re paid on a per-flight basis and may receive bonuses for completing certain routes or flights. They also have the ability to negotiate their own pay rates and work with multiple airlines, which can provide a diverse range of experiences.

Ultimately, the decision to work as an airline pilot contractor depends on your personal goals and priorities. Consider all factors, including job security, benefits, pay, and flexibility, before making a decision.

Working as an airline pilot contractor has its benefits and challenges.

On one hand, it offers flexibility in terms of work schedule, providing more time for family and leisure activities. Additionally, pilots can earn higher salaries compared to traditional employment and have the opportunity to choose their preferred aircraft type, route, and carrier. The job also comes with the perk of traveling to different countries, which is an exciting prospect.

On the other hand, irregular work patterns can make it difficult to maintain consistent income streams, leading to financial uncertainty. Contract-based employment means that job security is not guaranteed, and pilots are responsible for obtaining necessary equipment such as a headset or uniform. Furthermore, establishing long-term relationships with colleagues can be challenging due to the temporary nature of the job.

Whether you’re an established airline pilot contractor or considering it as a career move, having a knowledgeable team behind you to make sure that you are paying the correct taxes in the most efficient manner is essential. 

Whether you work onboard aircrafts travelling overseas for commercial flights, or onboard a private jet for short-haul charters, there’s no doubt that being a pilot is one of the best-paid jobs out there. 

Unfortunately, being a high-flying, high-earning pilot doesn’t mean that you can escape the world of taxes! HMRC requires you to pay your fair share, just like everyone else. 

But you’ll be glad to hear that there is a silver lining in the form of the ‘HMRC pilot tax relief.’ Essentially, this program enables you to claim tax relief from HMRC on many of your work-related expenses and capital allowances. 

There are two ways that pilots can claim tax relief from HRMC:

1. Through a tax rebate claim based on the actual amounts you’ve spent
2. Through Flat Rate Expenses (FRE)

The main difference is that for a standard tax rebate claim, you need to have kept invoices and receipts of the actual amounts you’ve spent to show HMRC. With FREs, you don’t need any.

Flat Rate Expenses (FRE) explained

Flat Rate Expenses are a type of expenses allowance, similar to simplified expenses. Only pilots who are employed under PAYE can claim for FREs. You also can’t claim if your employer has already fully reimbursed you for your costs. 

The way FREs work is that a set amount of tax relief is pre-agreed between HMRC and an industry body for their workers to claim expenses on. For pilots, this was negotiated by the British Airline Pilots Association (BAPA). 

Since 2013, the biggest FRE uniformed pilots and co-pilots can claim is £1,022 per year. The actual sum of money varies, as each pilot can claim tax relief on FREs at the highest rate of tax they pay (40% for high earners). 

What expenses can you claim on through FREs?

You can claim pilot tax relief through FREs on any of the following work expenses and capital allowances:

• Cleaning your work uniform
• Duplicate passport
• Navigation flight computer 
• Sunglasses
• Calculator
• Pens & clipboards
• Flight case
• Travel Iron
• Stopwatch
• Currency commission 
• Atlas
• Mileage scale rule
• Chart plotters

Pilots can also claim an additional £110 on FREs to use for travel to certain events, which include:

• Relevant training courses
• Medical examinations
• Flight simulator training
• Refresher courses

In addition to these expenses, pilots can claim capital allowances for their noise-cancelling headphones if they have not been provided by their employer.

If you are self-employed or paid outside of PAYE, then you can only claim the HRMC pilot tax relief by submitting a tax rebate claim via Self Assessment. Be as organised as you can. Keep proof of your work expenses to show as evidence to HMRC.

In the UK, if you’re self-employed or earn £150,000 or more from employment in any given tax year, you’re legally required by HMRC to file for Self Assessment and complete a tax return. For example, you’d need to file a tax return if your annual pilot salary was £120,000 and you also made £30,000 in that tax year from personal investments.

If you are claiming your expenses through FREs, then the allowance will be added automatically and incorporated through your tax code. However, if it’s your first time claiming for FRE, you need to contact HMRC or include the allowance on your tax return. If your employment situation changes, it is your responsibility to tell HMRC so they can amend your tax code accordingly.

If you’re self-employed or want to claim the full amount of your expenses, you must file a self assessment tax return and fill out the relevant expenses section on the form. 

Yes, you can! Pilots and other airline staff can claim tax back for up to four previous tax years, if they think they have expenses they are eligible to claim for.