New HMRC evidence requirement for PAYE employment expense claims
By Susan Cattell, Head of Tax Technical Policy
8 October 2024
HMRC is introducing a new requirement to provide evidence for PAYE (P87) employment expenses claims from 14 October. We outline the changes.
Employees can claim income tax relief for allowable expenses, where their employer does not reimburse them. The relief can be claimed through PAYE if the amount is up to £2,500.
HMRC has found that increasing numbers of ineligible claims are being submitted for employment expenses. HMRC's Don't Get Caught Out Campaign already reminds taxpayers to check they are eligible before claiming relief on work expenses and to raise awareness of the risks of submitting ineligible tax refund claims when using some repayment agents. Now it has decided to change the process for making the claims.
New process for making claims from 14 October
From 14 October 2024, HMRC will require anyone who wants to claim PAYE employment expenses to use a P87 form and provide supporting evidence to prove their eligibility before it processes their claim.
HMRC had already suspended processing of some claims on 10 June because of the risks it had identified. It’s now writing to those affected (including agents) to let them know about the new requirement to provide evidence.
Despite HMRC’s attempts to expand usage of its digital channels, from 14 October, it will no longer be possible to submit a PAYE employment expense claim using the digital form (or make a new claim over the phone). Taxpayers will still be able to use GOV.UK to check their eligibility to claim employment expenses, and to find the P87 form.
The printed P87 form and supporting evidence will have to be submitted by post, along with the supporting evidence. HMRC recognises that while agents regularly submit paper claims, it may be more convenient for individuals to submit online. It is working to reinstate the digital process as soon as possible. According to HMRC’s briefing paper about the changes, it will be possible to claim online for ‘uniform, work clothing and tool’ expenses (flat rate expenses), from 31 October 2024. For all other expenses, HMRC expects a digital claim route to be available by April 2025.
Evidence required
Taxpayers will have to tell HMRC which employment they incurred the expense for – as well as whether their employer reimbursed any of the cost (if they did, evidence of how much was reimbursed will need to be provided). HMRC has given examples, in the briefing paper, of some of the types of evidence it will expect to see:
- Subscriptions to professional bodies: Copies of receipts, or other evidence, that shows how much was paid for each professional subscription claimed.
- Mileage allowance: A copy of a mileage log for each employment. This should include the reason for every journey and the postcodes for the start and finishing points.
- Hotel and meal expenses (subsistence): Copies of receipts that include the date of a stay or a meal, and the name of the hotel or restaurant.
- Expenses for working from home: Evidence that the taxpayer must work from home, such as a copy of their employment contract. If it’s not stated in the employment contract, something else that explicitly states they must work from home. If it’s their choice to work from home, they can’t claim this expense.
- Other expenses: A full list of the other expenses that they’ve claimed and the employments they’re for. HMRC will also need copies of receipts or other evidence that show the name of the item, and that the claimant paid for it.
- Uniform, work clothing and tool expenses (also known as Flat Rate Expenses): Evidence will not be required for these Flat Rate Expenses (FRE) claims. However, claimants are still responsible for making sure they are eligible to claim FRE.
Let us know your views
We respond to tax consultations and calls for evidence and attend meetings with HMRC at which service levels, delays and other issues you raise with us are discussed. We welcome input from members to inform our work; email tax@icas.com to share your insights and feedback.
