We all want to claim back as much tax as we possibly can. If you are self employed, you will put through as many expense s as possible to minimise your tax bill. But if you are an employee who gets paid each week or each month and has the tax deducted by your employer you may think there is little you can do. During the pandemic many people became aware that they could claim £6 per week working from home allowance, but if you now choose to work from home, rather than being required by your employer to work from home, then that allowance is no longer available. Sometimes your employer requires you to do things that involves a personal cost such as travelling to or entertaining a customer or supplier. Maybe attending a conference or exhibition. In most cases employees will submit an expense claim to the employer and the employer will reimburse the employee. However in the event the employee is not reimbursed some or all of the expense, he or she can make a claim to HMRC to get tax relief on the amount not reimbursed. Up until now claims have been able to be made online and were fairly straightforward.
Starting from 14 October 2024, HM Revenue and Customs (HMRC) will require taxpayers to provide supporting evidence when claiming PAYE employment expenses. This new requirement aims to address the growing tax risk associated with ineligible claims for employment expenses.
Previously, employees could claim income tax relief for allowable expenses not reimbursed by their employer by phone or online. However, HMRC identified an increase in ineligible claims, prompting the need for stricter checks. The new process mandates that claimants submit form P87 along with evidence proving their eligibility for the claimed amounts. This evidence may include receipts, invoices, or other documentation verifying the expenses incurred. The form details everything you need to include.
You can then send the form and the evidence to:
Pay as you Earn and Self Assessment
HM Revenue & Customs
BX9 1AS
If you have had a claim that has been paused, you will receive a letter from HMRC informing you of the new process and they are working hard to reinstate the digital process as soon as possible, but unfortunately it appears the system has been broken by a number of unscrupulous advisors telling people they can make claims, when they can’t! So whilst this probably seems to be a retrograde step by HMRC they are having to undertake these measures to protect the public purse and you the tax payer from those unscrupulous advisors.
The introduction of this requirement is part of HMRC’s broader effort to ensure that only eligible taxpayers receive tax relief. By increasing the checks and processes in place, HMRC aims to prevent ineligible payments and ensure that customers get the tax relief they are entitled to in a straightforward manner.
This change reflects HMRC’s commitment to maintaining the integrity of the tax system and reducing the risk of fraudulent claims. It also underscores the importance of maintaining accurate records and documentation for employment-related expenses.
Don’t’ get caught out. If someone offers you the chance to get a tax refund, that sounds too good to be true, it almost certainly is and ultimately, you the taxpayer could be out of pocket. The way these advisors have been operating is by offering to make a claim on your behalf, getting the tax refund paid to themselves and then they deduct a percentage as their fee. You get the balance. When HMRC discovers a claim has been made in error, it is the taxpayer deemed to be at fault. You, the taxpayer, has to repay the tax they refunded to you, plus interest and potentially penalties.
Always check you are dealing with a qualified accountant or tax advisor. They will be a member of a professional body and as a result, they will be required to have professional indemnity insurance. In the event they have messed up, you can claim those additional costs (interest penalties and their fees) back. But more importantly, they are less likely to give you bad advice in the first instance.