Important update: New PAYE expense claiming process

From 14^th October 2024, PAYE claims for tax relief on employment expenses must now be submitted by post using form P87, accompanied by supporting evidence.

This new process replaces online and phone submissions temporarily, as HMRC aims to tackle ineligible claims and ensure tax relief is correctly applied. Online claims for certain flat-rate expenses, like uniforms and tools, are expected to return by 31 October 2024, with full online services restored by April 2025.

We’ve distilled changes to this process into the key points you need to know, what evidence you can provide, and what happens next.

So why has HMRC introduced this change? 

HMRC identified an increasing risk of ineligible claims for employment expenses. The new postal process aims to reduce errors and ensure accuracy before tax relief is granted, instead of correcting issues after claims are processed.

Who is eligible to claim?

 Employees can claim income tax relief for work-related expenses not reimbursed by their employer, provided they meet certain conditions, including paying more in income tax than the relief claimed.

What evidence should you provide?

Supporting documents like receipts and mileage logs must be included with the form. For example:

• Working from home: Proof, such as an employment contract, showing that remote work is required by the employer.
• Mileage allowance: A log showing the purpose and location of each trip.
• Subsistence (hotel and meals): Receipts showing dates and locations.
• Professional subscriptions: Copies of receipts for each subscription.
• Additional expenses: A breakdown of expenses by employment with receipts.

Self-assessment claims will remain unchanged: For those required to submit self-assessment returns, or if claiming over £2,500 in expenses, the process remains the same. However, HMRC will be conducting more checks to verify eligibility.

No evidence is needed for some claims: Uniform, work clothing, and tool flat-rate expense claims don’t require supporting evidence, but employees must ensure they are eligible. HMRC will conduct checks to prevent incorrect claims.

What’s Next?

The temporary postal process is in place to give HMRC time to refine its systems. For now, if you plan to submit a claim for PAYE tax relief on employment expenses, make sure you are following the correct steps and gathering the necessary supporting documents. While the transition may take some getting used to, this approach is designed to ensure greater accuracy and prevent the growing issue of ineligible claims. HMRC works are to restore full online services by April 2025.

Have a question?

For the latest processes on PAYE expense claiming and self-assessment tax returns, call us on 0203 912 9933 or email info@verallo.com.