QUESTION: Are employees missing out on valuable tax relief for job-related expenses, simply because the process seemed too complicated or time-consuming?
ANSWER: HMRC has launched a new digital service allowing employees to claim tax relief for job-related expenses online. This service is especially relevant for employees who aren’t in Self-Assessment but incur work-related expenses of up to £2,500 per tax year that aren’t fully reimbursed by their employer.
Previously, employees had to rely on paper forms or include expense claims as part of their Self-Assessment tax returns. Now, HMRC’s digital platform provides a more streamlined process for those who qualify, offering a quicker and more efficient way to make claims.
Employees can use the service to submit claims for multiple tax years and up to five different employments, making it particularly useful for those with complex work arrangements.
For employees who are eligible, the process begins with a simple questionnaire to determine whether the digital service is the correct way to claim. Once confirmed, employees will need to log in to their Government Gateway account to continue.
One key element of this process is the submission of evidence. Employees will be asked to upload supporting documentation of their expenses, which HMRC will use to process the claim without needing further follow-up. This online submission is expected to speed up the time it takes to process claims, a welcome improvement for both employees and employers.
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The documentation requirements for the new digital service mirror those of the previous paper-based process. Business owners should ensure their employees understand the type of evidence they need to provide, which will depend on the nature of the expenses being claimed. Common examples include:
- Business mileage: Employees must provide detailed mileage logs, including the reason for each journey and the postcodes where it began and ended.
- Travel and subsistence: Receipts and invoices are necessary, showing details such as the name of hotels or restaurants, dates, and amounts.
- Working from home costs: Claims must be supported by evidence from an employment contract stating that working from home is a requirement, not a choice. For those claiming actual costs instead of the default allowance (£26 per month), calculations justifying the amount will also need to be provided.
HMRC has published further examples of evidence required for other types of employment expenses, and employees should check these guidelines to ensure their claims are accurate.
While the new online service is designed for convenience, it isn’t the only way to claim tax relief. Employees who prefer paper-based submissions can still use the traditional P87 ‘print & post’ form. This method will remain available alongside the digital option.
Employees in Self-Assessment will continue claiming tax relief for employment expenses through their tax returns. However, they won’t need to provide evidence when filing, though they must retain adequate records of expenses for potential future inspections.
For employees claiming flat rate expenses - fixed deductions for work-related costs such as maintaining uniforms, protective clothing, or tools—there is a separate digital claims service. Flat rate expenses are particularly relevant for employees in specific trades, such as construction, healthcare, or manufacturing.
Malachy McLernon (malachy.mclernon@aabgroup.com) is partner at AAB Group Accountants Ltd (www.aabgroup.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies
