HMRC has updated their guidance pertaining to making claims for tax relief on business related expenses.
Following a temporary suspension of the online claim form, government has now reintroduced this and are encouraging employers to let employees know that this is available for use.
Following previous concerns raised in response to growing tax risks driven by ineligible claims for employment expenses between October 2024 and late December 2024, HMRC had to temporarily switch to a paper and post route, in order to prevent the risk of claimants receiving tax relief that they were not be entitled to.
Form P87 can be used to claim tax relief on genuine business expenses provided the amount does not exceed £2,500, a Self-Assessment must be filed for claims above this amount.
Tax relief cannot be claimed if the employer has reimbursed the expenses in full but if reimbursement is below the HMRC exempt/flat rates amounts, tax relief may be claimed on the difference between the two.
Claims should now be presented using the online iForm, HMRC are encouraging employers that do not reimburse business related expenses in full , to remind employees firstly that they can apply for tax relief from HMRC and that claims can be made via the online access to make the process easier.
Claimants will be required to provide supporting evidence where required to support specific claims.
Examples of some expenses that tax relief can be claimed for are:
Working from Home – In the main; for employees that have a contractual agreement to do so, where no such facility exits in the workplace and the duties performed at the home are ‘’substantive’’ where facilities exist to enable them to fulfil those duties in the home. If the conditions are met, the employee can claim tax relief on the working from home allowance which is currently set at a weekly flat rate of £6 (£26 monthly).
Uniform, work clothing and tools - If claims are in line with HMRC flat rates, typically this is set at a flat rate of £60, employees can claim tax relief and do not need to send any evidence of this. However for any claims above this or if claiming the full cost of the expense supporting evidence - therefore receipts etc, will be required.
It is worth mentioning that although the flat rate of £60 is mentioned different allowances are set or certain industry sectors resulting in increased flat rates under the flat rate exemption.
