Tax Relief Claims On Employee Expenses Changed
Employees on PAYE who need to make expenses claims can no longer currently make their claims online, and instead will have to use a postal system to deal with HMRC. Anyone who has out-of-pocket expenses for their job is entitled to claim tax relief on these from HMRC. Some people will do this on a self-assessment form, if they are self-employed or need to file a return for other reasons, or if they need to claim more than £2,500.
However, if they only have PAYE earnings and no need to file a self-assessment they will now need to file a P87 form and will need to provide supporting evidence for the claim by post. Many expenses will be reimbursed directly by the employer, which cannot then be claimed again with HMRC for tax relief. But if the employer does not reimburse all these expenses, which can include professional memberships or ongoing education, then these would qualify for tax relief.
Prior to October 14, 2024, the claims could be made by PAYE employees online, by phone or by post. But HMRC is currently insisting any claims are made by post, with relevant documentation sent to:
Pay As You Earn and Self-Assessment
HM Revenue and Customs
BX9 1AS
What exactly can you claim for?
There are myriad items that can be claimed for, and HMRC has outlined numerous examples along with the kind of evidence that would need to be included for the tax relief to be considered. These include:
- Subscriptions to professional bodies: copies of receipts, or other evidence, showing how much was paid for each subscription.
- Mileage allowance: a copy of a mileage log for each employment showing the reason for every journey and the postcodes for the start and finishing points.
- Hotel and meal expenses (subsistence): copies of receipts that show the date of the stay or meal, and the name of the hotel or restaurant.
- Expenses for working from home: evidence that the employee must work from home. This could be a copy of their employment contract or something else that explicitly states they must work from home. A claim for relief cannot be made if the employee chooses to work from home.
- Other expenses: a list of each expense showing the employments they are for, plus copies of receipts or other evidence showing the name of the item and the date the expense was incurred.
Source: HMRC
There are also some conditions that apply to making these claims, which include having to pay at least as much in tax as is claimed in the relevant tax year and providing evidence to support the claim. Exceptions to this include claims for uniforms, work clothing and tool flat rate expense claims. Some expenses will also be expected to be reimbursed by the employer.
Why has this change happened?
HMRC said it has “identified a growing tax risk driven by ineligible claims for employment expenses”, and that by changing the way the claims are made, it should “help people get their tax right first time, instead of focusing on correcting issues after they arise”. Employees need to be sure they are eligible to claim as HMRC will check this.
Any employees and agents of employees who currently have claims in process are being informed if these claims are being paused. But HMRC says it is working to reinstate the digital claims process as soon as it can. The process for submitting expense claims through self-assessment is unchanged.
The reinstatement of digital claims for uniform, work clothing and tool flat rate expenses for PAYE employees is expected to happen from the end of October, and for all other expenses by April 2025. If the claimant has more than one job, they must tell HMRC which employment the expense relates to, and whether any part of this was reimbursed by the employer. If it was, then evidence showing how much was reimbursed must also be provided.
We can help you
You should never pay more in tax than you need to, and there are various expenses PAYE employees can legitimately claim for. If you are unsure about what these are, then please get in touch and we would be happy to help you work this out.
