Proof of employment expenses now required

HMRC now insists on evidence of employee expenses claimed through PAYE. What records do you need to keep?

Proof of employment expenses now required

Due to numerous incorrect claims, it's now necessary to submit evidence to HMRC to claim tax relief on certain employment expenses that are not reimbursed by employers. The new process only affects those that claim the relief via PAYE; those completing self-assessment tax returns can continue to claim employment expenses within their tax returns and do not need to provide receipts unless HMRC requests them. Additionally, there is no need to send proof regarding claims for flat rate expenses, such as uniform, work clothing and tools.

Employees who need to claim tax relief on their employment expenses via PAYE can do so using Form P87 by post. HMRC guidance confirms that robust evidence will need to be submitted alongside the form. For example, if a claim is made for the costs associated with working from home, the employee needs to supply a copy of their employment contract showing that they must work from home. Claims for business mileage are also in the firing line, with employees now expected to record the start and end postcode along with the reason for every single business journey.

A copy of the form and guidance on the types of evidence that need to be enclosed can be found here.

Muir & Addy is a partnership registered to carry out audit work by the Institute of Chartered Accountants in Ireland (ICAI). Chartered Accountants Ireland is the operating name of ICAI.

Details of our audit registration can be viewed at www.auditregister.org.uk, under reference number 223287.

Chartered Accountants in Ireland (ICAI)