Tax Relief For Work-Related Expenses

HMRC has changed the process this year and introduced new guidelines for workers and employees to claim tax relief for work-related expenses. Previously, individuals used to call HMRC or log on to their online tax account and make changes to their tax account by claiming tax relief on work-related expenses. But from May 2022, all individuals who wish to claim tax relief for business-related expenses and apply for potential refunds should submit from P87.

For expenses less than £2,500, an individual must submit form P87; if expenses are more than £2,500, a self-assessment tax return must be filled out. HMRC made these changes to counter the abuse of certain agencies trying to collect tax refunds on behalf of their clients and not passing on the money or trying to deduct their fees directly from the tax refunds received from HMRC. HMRC have recently received many calls from taxpayers asking for their refunds or questioning letters sent to them by HMRC that the refund has been processed and paid to their designated or authorised agent account.

Organisations have challenged the HMRC decision and petitioned the High Court to use the judicial review procedure and review HMRC changes. HMRC has opposed the agencies’ application on two fronts. First, it was legally entitled to make the required changes and secondly, the application for the petition was late.

HMRC will continue its policy after the judicial review, even if the outcome is against the guidelines published by HMRC. Use Form P87 or your HMRC online account to claim tax relief for job-related expenses under £2,500 in the current tax year. If your claim exceeds £2,500, the HMRC mandates self-assessment.