Accountants for pilots

HMRC and BALPA have agreed an industry-wide flat rate expense for uniformed commercial pilots, co-pilots (including helicopter pilots) and other uniformed flight deck crew working in the UK. It does not cover cabin crew, who have a separate £720 flat rate.

• £1,022 a year flat rate expense, covering items such as uniform cleaning, flight cases, sunglasses, reference material, duplicate passports and flight planning equipment such as a CRP5 and chart plotters. It is reduced if your employer already pays for a significant share of these.
• Plus £110 a year for travel to medicals, simulator sessions, technical refreshers and safety training, or your actual costs if higher.
• Plus the cost of replacing uniform if your employer requires one but does not provide it.
• Plus capital allowances on a noise-cancelling headset if your employer does not provide one (not if you choose a better model than the one offered).
• Plus two-thirds of your BALPA subscription.

If you would rather claim the actual cost of the items the flat rate covers, you give up the flat rate for that year. Claims can go back four previous tax years, so a pilot who has never claimed may be due relief for five years. Separately, the law lists fees for issuing or renewing a Civil Aviation Authority licence, including related medical examination fees, for flight crew of UK-registered aircraft as deductible professional fees for employees. Your accountant will check how that fits alongside the flat rate in your case.

Alex is an employed captain in England on a salary of £110,000, with no other income. Here is Alex's Income Tax in three scenarios.

Scenario 1: no claims. Adjusted net income is £110,000, which is £10,000 over £100,000, so the £12,570 personal allowance falls by £5,000 to £7,570. Taxable income is £102,430. Tax is 20% of £37,700 (£7,540) plus 40% of £64,730 (£25,892) = £33,432.00.

Scenario 2: claims the £1,022 flat rate and £110 travel deduction. Income falls by £1,132 to £108,868. The personal allowance falls by £4,434 to £8,136, leaving taxable income of £100,732. Tax is £7,540 plus 40% of £63,032 (£25,212.80) = £32,752.80, a saving of £679.20. That is 60% of the claim, because in this band every £1 of deduction also restores 50p of personal allowance.

Scenario 3: also sacrifices £10,000 of salary into the airline pension scheme. Income falls to £98,868, so the full £12,570 personal allowance is restored. Taxable income is £86,298. Tax is £7,540 plus 40% of £48,598 (£19,439.20) = £26,979.20, a further saving of £5,773.60.

Pension contributions count towards the annual allowance, which is £60,000 for 2026/27, with unused allowance from the previous three years available to carry forward. It tapers down if your threshold income is over £200,000 and adjusted income is over £260,000. If you or your partner claim Child Benefit, adjusted net income above £60,000 also triggers the High Income Child Benefit Charge, which claws back all of it at £80,000. Scottish taxpayers pay Scottish Income Tax rates on earnings, so the figures differ. National Insurance is not included above.

Training an airline provides for its pilots is work-related training, so it is not a taxable benefit. The difficulty is money pilots pay towards it.

• Training bond repayments made because you leave within a set period do not qualify for tax relief. In Milsom and Hinsley, the tribunal agreed with HMRC that the repayments were not an expense every pilot had to bear and that the training was not undertaken in the performance of the duties.
• Reduced salary arrangements, where an airline pays less until training costs are recovered, mean you are only taxed on the pay you are contractually entitled to, which gives the same effect as relief. A lump sum repaid on leaving early still gets no relief.
• Self-funded training for a job you do not yet have, such as initial licence training or a type rating before joining, is not undertaken in the performance of an employment, so employees do not get relief for it.
• Self-employed and contract pilots can claim training that improves skills they already use in their business or keeps them up to date, but not training to start a new business.

Airlines usually pay allowances for trips away from base. An employer can pay subsistence at HMRC's published benchmark rates, including the overseas scale rates for employees travelling outside the UK, or at a bespoke rate agreed with HMRC, without deducting tax or National Insurance. It can also reimburse actual vouched costs. Payments above the published or agreed rates need reporting, and the excess is taxable. If you are unsure whether your allowances are paid under an agreed rate, your payslips and your airline's expenses policy are the place to check.

UK residents pay UK tax on their worldwide income. Residence is decided each tax year under the Statutory Residence Test, and pilots need to know one rule in particular: the automatic overseas test for people who work full time abroad does not apply to anyone whose job is on board an aircraft. A pilot who moves abroad to fly for a foreign airline therefore has to look at the day-count tests and the sufficient ties test instead, where keeping a home, family or work in the UK makes it more likely you remain UK resident.

For UK residents, duties performed on an aircraft during a flight that begins or ends in the UK are treated as performed in the UK. Residence mistakes can be expensive, so get advice before a move rather than after.

If you provide your services through your own limited company, the off-payroll working rules decide whether you are taxed like an employee. Where the client is a medium or large business or in the public sector, the client decides your status and must give you a status determination statement. Where the client is small, your own company decides. The rules apply contract by contract, so one engagement can be inside IR35 and the next outside. Our inside vs outside IR35 quick assessment is a useful first check, and the outside IR35 contractor calculator shows take-home pay.

Outside IR35, a company pays Corporation Tax on profits (19% up to £50,000 in the year from 1 April 2026, 25% above £250,000, with marginal relief between) and you usually draw a salary plus dividends, taxed at 10.75% in the basic rate band and 35.75% in the higher rate band after a £500 allowance. For VAT, the general rule for business-to-business services is that they are supplied where the customer belongs, so services to an airline based outside the UK are generally outside the scope of UK VAT, while UK clients are charged VAT once you are registered. Employer pension contributions made by the company can be a tax-efficient way to use the annual allowance; see pension contributions through a limited company.

• 5 October 2026: tell HMRC if you need a tax return for 2025/26 and are not yet registered.
• 31 January 2027: file your 2025/26 return and pay any tax due, plus any first payment on account for 2026/27.
• 31 July 2027: second payment on account, if you make them.
• 31 January 2028: file your 2026/27 return.

GoForma is a UK online accountancy practice working with employed professionals, contractors and limited companies across the UK by phone, video, email and WhatsApp. Our accountants are ACCA and AAT qualified.

• Employed pilots: a one-off Self Assessment tax return for £198, prepared and filed by an accountant.
• Contract pilots with a limited company: the Start Bundle (£88 a month plus VAT, 50% off for the first 3 months) includes a dedicated accountant, year-end accounts and Corporation Tax return, payroll for one director, FreeAgent and an IR35 review on every contract. The Operate Bundle (£128 a month plus VAT) adds VAT returns, your Self Assessment and the confirmation statement.

Book a free consultation to check what you can claim or how a contract should be structured.