HMRC is changing the way employees can claim PAYE employment expenses
HMRC is changing the way employees can claim PAYE employment expenses
From 14 October 2024, HMRC will be requiring employees to claim PAYE employment expenses using a P87 form, which means that you will need to provide supporting evidence to prove the eligibility of the expenses before the claim will be progressed.
Employees can still claim this tax relief through PAYE if the amount claimed is no more than £2,500. HMRC have advised that this is a bid to crack down on fraudulent claims and will be requiring claims to be made by post on paper forms with the supporting evidence.
HMRC have advised that they are currently writing to claimants (including agents and accountancy firms), whose claims have not been processed since 10 June 2024 when the system was halted, to inform them of this new requirement and to ask them to provide evidence to support their claim.
From 12 October 2024, claimants will no longer be able to submit a PAYE employment expense claim using the digital form or make a new claim over the phone.
HMRC admitted in the expenses claim update notice that ‘we do recognise that an online claim route is more convenient for customers, which is why we are working at pace to reinstate the digital process as soon as possible’.
For uniform, work clothing and tool expenses, known as flat rate expenses, claimants will be able to claim these online from 31 October 2024. It will also not be necessary to provide evidence of the expense unlike for all other types of expenses claims.
For all other expenses, HMRC expects to set up a digital claim route by April 2025.
Evidence requirements are also becoming more complex
HMRC is stressing that evidence of expenses will have to be provided for everything apart from flat rate expenses.
Taxpayers must tell HMRC which employment they incurred the expense for, as well as whether their employer reimbursed any of the cost, and if they did, show evidence of how much.
They must also have paid tax in the year that they spent money on the expense being claimed. For example, if they spent £60 and pay tax at a rate of 20%, the tax relief they can claim is £12.
HMRC requires evidence of subscriptions to professional bodies with copies of receipts, a copy of a mileage log including the reason for every trip and the postcodes for the start and finishing points. Receipts must be provided for hotel and meal expenses with the name of the hotel or restaurant.
On expenses from working from home, HMRC requires a copy of the employment contract stating that the employee must work from home. The relief is not available for those who simply choose to work remotely.
As part of the crackdown, HMRC has also begun compliance work looking at employment expenses submitted via self assessment (SA) returns. This will include checks on the eligibility of claims, with possible requests for further evidence.
Further details can be found here Evidence required to claim PAYE (P87) employment expenses
If you are contacted by HMRC or would like any assistance with a P87, please contact us here at Kennedys Accounting.