A guide to explain the different ways employees can claim tax relief for the employment expenses they incur as part of their jobs.
This is a freeview 'At a glance' guide to employees claiming tax relief for employment expenses.
At a glance
There are several different ways in which Income Tax relief can be claimed by an employee on job-related expenses.
To obtain tax relief, the expense must have been:
- Incurred personally and not reimbursed by your employer.
- Incurred 'wholly, exclusively and necessarily' in the performance of your employment.
- You must be a taxpayer in order to claim relief.
All claims must be made to HM Revenue & Customs.
Claims may be made (subject to the exceptions listed) :
- Online
- By phone
- By post
When making a claim: you will need your employer's name and PAYE reference in order to make the claim. Ask the HR department for these details. They also appear on your end-of-year PAYE summary form P60.
Recent changes
HMRC paused processing employee claims from 10 June 2024, a new regime applies from 14 October 2024. See New evidence requirements for employment expenses
Online claims
Claims for 'uniform, work clothing and tool' expenses can be made online from 31 October 2024.
From 14 October 2024, all other claims must be made by post.
The withdrawal of online claims is the result of the introduction of evidence requirements. It is anticipated online claims for all other expenses will be reinstated from April 2025.
Other than the requirement to add evidence of expenses incurred, when online claims resume it is expected the criteria will be unchanged in all other respects as follows:
- You are not already in Self Assessment.
- The claim is for less than £2,500 in a single tax year.
- Your claim is in respect of:
- Working from home allowance
- Uniform, work clothing & tools
- Mileage and fuel
- Travel & overnight expenses
- Professional fees and subscriptions
- Plant and equipment
- Other expenses (if wholly, exclusively and necessarily incurred in the performance of your employment).
Phone claims
Prior to 14 October 2024, it was generally possible to make a claim by phone if expenses were claimed in a prior year and they total less than either:
- £1,000.
- £2,500 for professional fees and subscriptions.
From 14 October 2024, employees will no longer be able to make a new claim over the phone.
Postal claims
From 14 October 2024, all claims must be made on Form 87 submitted by post. The form can be used to claim:
- On someone else’s behalf.
- For multiple tax years.
- For multiple jobs.
Evidence must be provided with the From P87 to prove the individual incurred the cost. The evidence requirements will be appropriate to the nature of the expense. Employees must also tell HMRC which employment the expense related to, whether their employer reimbursed any of the cost, and if they did, evidence showing how much was reimbused.
From 21 December 2022, claims made on form P87 must include:
- All details in section 1 (personal and employment details), except for the individual's phone number and title.
- The employer PAYE reference number in section 2 (found on P60s, P45s or the individual's Personal Tax Account).
- The industry type in section 2 (where the claim includes flat rate expenses).
Forms received by HMRC which do not include these details will be rejected.
Following a clampdown on overcharging by unscrupulous tax agents, a new claim form was made available on 12 February 2024:
- This includes a nomination section to be completed where any repayment due should be made to a third party, such as an agent.
- The new form must be used for claims submitted from 26 February 2024: claims made thereafter using the old form will be rejected.
It is not known if further changes to the Form P87 will be made to reflect the requirement to provide evidence.
Evidence accompanying the Form P87 should be sent to:
Pay As You Earn and Self Assessment
HM Revenue and Customs
BX9 1AS
Unable to contact HMRC by post or online?
In December 2023 HMRC announced you can contact HMRC by phone if you’ve already claimed the same expense type in a previous year and your total expenses are £2,500 or less. You cannot claim working-from-home expenses by phone.
The HMRC briefing in relation to the evidence requirement only refers to new claims no longer being accepted over the phone. There is no immediate indication of whether preexisting claims can be dealt with by phone, but certainly from 14 October 2024 evidence will be required for a claim to succeed.
Self Assessment
If you complete a Self Assessment tax return you need to make the claim in the Employment income section.
Information that you will need when filing an expense claim includes:
- The receipts for the expenses that you are claiming.
- Details of any business mileage undertaken, which could include journey details, miles travelled and Authorised mileage payments received.
- Receipts for any Hotel and Meal expenses incurred.
Useful guides on this topic
Employee expenses
A series of guides that look at the rules covering employee expenses
Authorised mileage rates (own vehicle)
How much can you claim for the costs of business travel? How much can be reimbursed by an employer towards the costs of qualifying business travel?
Subsistence (employees)
Can employees claim tax relief for subsistence? How do you make a claim?
Accommodation: With travel or temporary workplaces
What cash allowances can be provided for business travel? What qualifies as business travel? What tax relief is available for accommodation?
Broadband
Can home-workers benefit from employer-provided broadband? What tax relief is available? How is it calculated?
Exemption for paid and reimbursed expenses
What exemptions apply for paid and reimbursed employee expenses? What are the rules?
Fees and subscriptions: List 3 (professional bodies)
What tax relief on professional membership fees and annual subscriptions? What's the legislation?
External Links
HMRC: Claim tax relief on employment expenses
Evidence required to claim PAYE (P87) employment expenses
Turn those acorns into oaks 😂
Join thousands of accountants and advisers (and their clients) who use www.rossmartin.co.uk as their primary TAX resource.
Register with us now (for free😍) to receive our FREE weekly SME Tax News update, tax tips and tools.
