Policy paper

Evidence required to claim PAYE (P87) employment expenses

Updated 17 October 2024

Background

Employers can choose to reimburse expenses incurred by an employee. If not reimbursed, the employee can claim income tax relief for allowable expenses from HMRC. These customers can claim this tax relief through PAYE if the amount claimed is up to £2,500.

Recently, we have identified a growing tax risk driven by ineligible claims for employment expenses.

We want to make sure that customers get the tax relief they are entitled to in as straightforward a way as possible. However, we also need to make sure that we identify where customers are not eligible and prevent them receiving payments they are not entitled to.

That’s why we’re implementing new evidence requirements for claimants, to respond to the tax risk from ineligible employment expense claims.

Our new approach

On 10 June, we suspended processing some claims for tax relief on employment expenses while we considered the best way to manage this risk.

In response, we have decided that we will be changing the PAYE employment expense process for customers.

From 14 October 2024, we will require customers who want to claim PAYE employment expenses to use a P87 form and provide supporting evidence to prove their eligibility before we progress the claim. More information on the types of evidence is under ‘evidence requirements’ below.

Our aim is to help people get their tax right first time, instead of focusing on correcting issues after they arise. We want to fix problems at source by taking preventative action to educate and prompt customers towards better compliance. 

This approach is built on stopping the ineligible payments going out in the first place through increased checks and changes to processes. This includes educating customers on the consequences of ineligible claims and disrupting the business model of firms that submit non-compliant claims.

We are currently writing to claimants (including agents), whose claims have not been processed since the 10 June, to inform them of this new requirement and to ask them to provide evidence to support their claim.

When customers send us evidence for P87 work expense claims, HMRC will check all evidence and confirm to customers whether they are entitled to tax relief.

Submitting PAYE expense claims

From this date, customers will no longer be able to submit a PAYE employment expense claim using the digital form or make a new claim over the phone. However, customers will continue to be able to use GOV.UK to check they’re eligible to claim employment expenses and to find the P87 form.

We expect that customers making genuine claims will be able to provide this information and submit it to HMRC, alongside the printed P87 form, in the post. Tax agents already regularly submit P87 claims via the post, so we do not believe this will cause agents any difficulties.

However, we do recognise that an online claim route is more convenient for customers, which is why we are working at pace to reinstate the digital process as soon as possible. For ‘uniform, work clothing and tool’ expenses, customers will be able to claim these online from 31 October 2024. For all other expenses, we expect a digital claim route to be available by April 2025.

HMRC will keep this updated process under review and will provide a further update in the future.

Wider work

As well as requesting evidence for employment expenses, we have already implemented other changes to reduce the likelihood of people making mistakes and to make it more difficult for people to try and abuse the tax system.

For example, this activity follows changes we made to the R40 form in December 2023 to require evidence of a PPI claim before we progress a claim for tax repayment.

We have also begun compliance projects looking at employment expenses submitted via Self Assessment (SA) returns. In these projects we will carry out checks on the eligibility of claims, asking for further evidence. Please note that the process for submitting SA employment expenses remains unchanged.  

Our Don’t Get Caught Out campaign reminds taxpayers to check they are eligible before claiming relief on work expenses and raises awareness of the risks of submitting ineligible tax refund claims when using some repayment agents.

HMRC uses a range of civil and criminal powers to tackle dishonest tax agents that cause harm to the tax system. For example, we recently took action against Research and Development tax firms, where we arrested 11 individuals (including some agents) on suspicion of cheating the public revenue and money laundering offences.

We also work in partnership with third parties like the Advertising Standards Authority to report and take down misleading adverts, so people are less likely to be taken in by disingenuous claims of no-risk money.

Evidence requirements

Customers must tell us which employment they incurred the expense for, as well as whether their employer reimbursed any of the cost, and if they did, show evidence of how much.

They must also have paid tax in the year that they spent money on the expense that they’re claiming. How much they can claim depends on the rate that they pay tax.

For example, if they spent £60 and pay tax at a rate of 20%, the tax relief they can claim is £12.

Examples of some of the types of evidence we would expect claimants to provide

Subscriptions to professional bodies

Copies of receipts, or other evidence, that shows how much was paid for each professional subscription claimed.

Mileage allowance

A copy of a mileage log for each employment. This should include the reason for every journey and the postcodes for the start and finishing points.

Hotel and meal expenses (subsistence)

Copies of receipts that include the date of a stay or a meal, and the name of the hotel or restaurant.

Expenses for working from home

Evidence that the claimant must work from home, such as a copy of their employment contract. If it’s not stated in the employment contract, we need something else that explicitly states they must work from home. If it’s the claimant’s choice to work from home, they can’t claim this expense.

No evidence is required for ‘working from home’ expense claims for tax years 2020 to 2021 and 2021 to 2022 provided that:

• employees were instructed to work from home (due to UK government Covid restrictions)
• they are submitted within the time limits

Other expenses

A full list of the other expenses that they’ve claimed and the employments they’re for. We also need copies of receipts or other evidence that show the name of the item and that the claimant paid for it.

Uniform, work clothing and tool expenses (also known as Flat Rate Expenses)

We will not require evidence for these Flat Rate Expenses (FRE) claims. However, customers are still responsible for making sure they are eligible to claim FRE. HMRC will still carry out risking to identify customers who may not be eligible to claim FRE. From 31 October 2024, customers claiming these FRE expenses will be able to use our digital claim route. All other types of expenses which require evidence will need to be submitted to HMRC using the post.

Where to send evidence

We will be asking customers to send evidence to:

Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS