Job expense claims to HMRC now require evidence

HMRC have recently tightened their process for claiming work expenses that aren’t reimbursed by their employer, including new requirements for submitting evidence with the claim.

Employees can claim tax relief on allowable expenses that aren’t reimbursed by their employer. This can be done via their self-assessment tax return or, if they don’t submit a return, claims can be made directly to HMRC.

Previously claims for job expenses of up to £2,500 per year could be submitted via HMRC’s digital process, via their phone lines or by post using the P87 form. HMRC didn’t require any evidence of the expenses to be submitted as part of the claim process.

However, this is an area that HMRC has recently identified as being high risk for tax abuse due to the volume of ineligible claims that have been submitted. Their recent tightening of the claim process hopes to address this issue. The first step was to suspend the digital claims process on 10 June 24.

From 14 October 24 claims can only be submitted via post using the P87 form. Supporting evidence for the expenses must now be submitted along with the claim form.

The type of evidence will vary depending on what is claimed but might include items such as:

• copies of a mileage log including journey date, start and finish postcodes and reason for travel
• evidence of payment for professional fees and subscriptions
• copies of receipts for travel expenses showing establishment name and date

If any working from home cost is being claimed, the claimant must be able to prove that their contract or terms of their employment requires them to work from home. Home working expenses can’t be claimed where working from home is an optional choice.

There is currently no requirement to provide evidence for flat rate expense claims such as uniform, work clothing and tools, however HMRC will be checking for potentially ineligible claimants. Find out more details in our Travel Expenses for Flexible Working article.

From 31 October 24 the online process should be available again, but only for flat rate claims. The digital claims process for other types of expenses will be updated and reinstated but may not be available until April 2025. Check how much tax relief you can claim for uniforms, work clothing and tools – GOV.UK (www.gov.uk)

These changes only affect claims for employment expenses made outside of the self-assessment tax return. Currently the process for submitting employment expense claims via the tax return is unchanged and doesn’t require submission of evidence.

However, this doesn’t mean that self-assessment taxpayers don’t need to keep evidence of their expenses. In the event of a tax check, HMRC can ask to see evidence for job expenses that are being claimed via the return.

So, whether tax relief on employment expenses is being claimed directly or via a tax return it’s very important to make sure there is sufficient evidence to back up any claims.

If you would like some advice on these changes and how they might affect you, please contact a member of our team by calling 01246 274121 or email taxteam@mitchellsaccountants.co.uk.