HMRC has recently tightened its requirements for employees seeking to claim tax relief on work-related expenses through PAYE, emphasising the need for robust evidence to support claims. This change stems from a rise in inaccurate or fraudulent claims, leading HMRC to enforce stricter rules to ensure that only valid expenses are approved. As a result, employees who claim tax relief on expenses that are not reimbursed by their employer must now submit detailed documentation. However, it’s important to note that these new evidence requirements apply specifically to those claiming through PAYE, while individuals who complete self-assessment tax returns remain unaffected for now. Self-assessment claimants can continue to include employment expenses in their returns without providing receipts unless specifically requested by HMRC.
The updated process does make exceptions for certain expenses. Flat-rate expenses, such as uniform costs, work-related clothing, and tools, are still excluded from the need to provide supporting documentation. This means that employees claiming these types of standard expenses can continue to do so without the burden of submitting additional proof. However, for other expenses, the level of evidence required has become much more stringent, especially when it comes to specific claims such as working from home or business mileage.
Employees looking to claim tax relief through PAYE must now submit their claims using Form P87, which can be completed and sent by post. According to HMRC guidance, every claim must now be backed up with strong, relevant evidence. For example, if an employee is claiming for the costs of working from home, HMRC will expect to see a copy of the employment contract clearly stating that home working is a requirement of the job. This means casual home working arrangements or personal preferences won’t be sufficient for a claim. In addition, claims for business mileage have also come under increased scrutiny. Employees making such claims are now required to provide precise details, including the start and end postcodes of each journey and the purpose behind each business-related trip.
HMRC’s new rules highlight the importance of accuracy and transparency when claiming tax relief. Employees should ensure that all supporting documents are comprehensive and accurate to avoid any issues or delays in processing their claims. HMRC has provided detailed guidance to help employees understand what evidence is required, and this information is available along with Form P87 on their website. By adhering to these new requirements, employees can ensure their claims are processed smoothly.
For those unsure whether it’s more advantageous to claim expenses through PAYE or self-assessment, or if gathering the necessary evidence seems overwhelming, professional advice can make the process easier. We can provide expert assistance in navigating these changes and help you decide the best approach for your situation, ensuring that you remain compliant with HMRC’s updated guidelines while maximising your eligible tax relief reach out to us on 01902 711370 or email enquiries@uklandlordtax.co.uk to book a call with one of our team of tax advisers to explore ways in which you can plan while taking into account the latest changes.