Changes to PAYE Claims for Tax Relief on Employment Expenses Starting 14 October 2024

Beginning 14October 2024, employees will need to submit claims for tax relief on employment expenses through form P87, which must be sent by post along with supporting documentation. The procedure for claiming via self-assessment will remain unchanged.

Tax Relief for Employment Expenses

Employees maybe eligible to claim income tax relief on expenses incurred while performing their job, provided these expenses are not reimbursed by their employer. Under certain circumstances, claims can be submitted through PAYE. Key conditions include that the employee must pay more in income tax than the relief amount being claimed. For further details, consult HMRC’s guidance.

Claiming Relief: New Process

Currently, employees can make PAYE claims online, via phone, or by mailing form P87. Starting 14 October 2024, all claims must be submitted by post using form P87, accompanied by supporting evidence. HMRC will review the submitted evidence to determine eligibility for relief.

HMRC is notifying employees and agents with paused claims about this new procedure.They have stated that efforts are underway to reinstate a digital claims process as soon as possible. By 31 October 2024, employees will likely be able to claim online for uniform, work clothing, and tool flat rate expenses without needing to provide evidence. Claims for all other expenses are expected to be available online by April 2025.

Required Evidence

When making a claim, employees must indicate which job the expense relates to and whether any reimbursement was received from their employer. If a portion of the expense was reimbursed, the employee must provide documentation showing the amount.

HMRC outlines the following examples of necessary evidence for various types of expenses:

• Professional Subscriptions: Receipts or documents indicating the payment amount for each subscription.
• Mileage Allowance: A mileage log detailing each journey's purpose and the start and end postcodes.
• Hotel and Meal Expenses: Receipts showing the date of the stay or meal and the establishment's name.
• Home working Expenses: Documentation proving the employee is required to work from home, such as a copy of their employment contract. Claims cannot be made if the employee opts to work from home voluntarily.
• Other Expenses: A list of each expense, indicating the relevant employment, alongside receipts or evidence that show the item name and date incurred.

Notably, HMRC will not require evidence for claims related to uniform, work clothing and tool flat rate expenses. However, employees are reminded to ensure their eligibility for these claims, as HMRC will conduct checks to identify those who may not qualify.

Rationale for the Change

HMRC has indicated that this change is a response to a rising tax risk associated within eligible claims for employment expenses. By implementing these new procedures, HMRC aims to assist individuals in accurately reporting their tax from the outset, rather than correcting issues after they occur.

Self-Assessment Considerations

In certain scenarios, such as when an employee is required to file self-assessment returns or if total expenses exceed £2,500, claims must be submitted via self-assessment. HMRC is reviewing expenses claimed in some self-assessment returns and may request additional evidence for eligibility. However, the process for reporting self-assessment employment expenses will remain unchanged.