Proof of employment expenses now required
HMRC now insists on evidence of employee expenses claimed through PAYE. What records do you need to keep?
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.
Related Topics
-
Do dividend waivers still work?
You need to take a dividend from your company but there’s just one problem. Your business partner, who is also a 50% shareholder, doesn’t want to take any more income from the company during this tax year. What’s the solution?
-
Save tax by combining directors’ loan accounts
You started a company last year and it’s time to prepare its first accounts. Your director’s loan account (DLA) is in credit but your spouse’s is overdrawn. Might amalgamating the DLAs avoid or reduce a tax charge?
-
Updated guidance on mandatory payrolling of benefits in kind
Much like the rollout of mandatory payrolling of benefits in kind, HMRC guidance on the matter is coming in dribs and drabs. What's the latest?