HMRC have advised that from April 2026, they will remove employment expenses and higher rate Gift Aid relief from PAYE tax codes where they believe a taxpayer's circumstances have changed.
Where HMRC have data showing that employment expenses and higher rate Gift Aid relief in a tax code are irrelevant or no longer correct, they will be automatically removed from the tax code from 2026-27.
HMRC have advised that for 2026-27 PAYE tax codes, employment expenses over £120 will be removed from the tax code if any of the following apply:
- The individual has no current PAYE earnings.
- There has been an employment gap of a full tax year since the expense was initially claimed.
- The taxpayer has not filed a Self Assessment return since 2021-22, where there are indicators that the employment expenses should have been resubmitted by Self Assessment.
- The taxpayer has employment expenses in their tax code that are higher than their 2022-23 Self Assessment return.
Regarding higher-rate Gift Aid relief, this will be removed if all of the following are met:
- The same amount of Gift Aid relief has been coded for at least three years.
- There has been no Self Assessment filed for at least three years.
If HMRC amend a tax code and the taxpayer believes the amendment is incorrect, they can submit a claim to HMRC via their online service.
Useful guides on this topic
Gift Aid: How it works
What is Gift Aid? How does it work? What are the rules?
Annual expenses for employees: How to claim
How can employees can claim tax relief for the employment expenses they incur as part of their jobs?
How to check your PAYE Code
Is my PAYE coding correct? How does HMRC work out tax codes? Why do people ignore their P2 code change notices? Follow the links to expert guidance.
What is the 2025/26 PAYE tax code?
What is the 2025-26 PAYE tax code? What do the different types of tax code prefixes and suffixes mean?
External links
CIOT: 2026/27 Annual coding notices - removal of Employment Expenses/Gift Aid Higher Rate Relief
ICAEW: Tax code changes for employment expenses and gift aid relief