HMRC will now require evidence to support PAYE employment expenses claim

From 14 October 2024 HMRC are changing the PAYE employment expenses claim process and will now require taxpayers who want to claim such expenses to use form P87 and to provide supporting evidence proving their eligibility for the amounts claimed.

HMRC are implementing these changes to look to address the tax risks associated with ineligible employment expenses claims being made by taxpayers or their representatives. The reasoning being this move is to stop ineligible payment being made by increasing the checks and processes in place.

Taxpayers will no longer be able to submit PAYE employment expenses claims via the digital online form or make a claim over the phone but will need to complete the printed P87 form and submit this via the postal system to HMRC along with their evidence in support of the claim.

Under this updated process taxpayers will be required to advise HMRC which employment expenses they have incurred, whether their employer has reimbursed any of the cost and, if they did, to also provide evidence of this.

HMRC are looking to reinstate the online claim format and expect that from 31 October 2024 claims relating to uniform, work clothing and tool expenses will be able to be made online. For all other expenses HMRC expect the digital route to be available from April 2025.

The process for submitting employment expenses claim via the self-assessment (SA) tax return route remains unchanged although HMRC have commenced compliance projects to specifically look at employment expenses claims submitted via SA. Checks will be made regarding the eligibility of the claims and evidence to support such claims will also be requested.

It appears HMRC remain focused on tax compliance and continue to look address areas where it is perceived there are tax risks.