HMRC Introduces new evidence requirement for PAYE Employment Expense Claims
Starting from the 14th of October 2024, HMRC will require taxpayers to provide supporting evidence when submitting claims for PAYE (P87) employment expenses.
This will affect claims for the tax year 2025/2026 onwards.
What’s Changing?
Employees can claim income tax relief on allowable work expenses (up to £2,500) if not reimbursed by their employer. However, HMRC has identified a rise in ineligible claims.
As part of its ongoing ‘Don’t Get Caught Out’ campaign aimed at promoting accurate claims and cautioning against certain repayment agents, HMRC is tightening its process.
The New Claim Process from 14 October 2024:
- P87 Form & Evidence Required: All PAYE expense claims must be submitted using a P87 form and must include supporting documentation.
- Digital Submissions Suspended: From 14 October, taxpayers can no longer submit claims via HMRC’s digital form or by phone. Only postal submissions will be accepted initially.
- Digital Options Coming Back: HMRC aims to reinstate online claims for Flat Rate Expenses (FREs), such as uniform and tools by 31 October 2024. Full digital claiming for all other expense types is expected by April 2025.
HMRC had already paused some claims from the 10th of June 2024 due to concerns and is now contacting affected individuals and agents.
Evidence Requirements
Claimants will need to confirm:
- The employment the expenses relate to
- Whether any costs were reimbursed (with proof if so).
Examples of required evidence:
- Professional subscriptions: Receipts or proof of payment
- Mileage claims: A log detailing each journey, purpose, and start/end postcodes
- Hotel/meals: Dated receipts showing the name of the hotel or restaurant
- Homeworking expenses: A contract or official document showing homeworking is mandatory (claims not allowed if homeworking is by choice)
- Other expenses: Receipts clearly showing item names, cost, and which job they relate to.
Note: Evidence is not required for Flat Rate Expense (FRE) claims, but eligibility must still be confirmed
