The Chartered Institute of Taxation has published an article stating that HMRC has advised it that the 2026/27 coding notice process will include the removal of employment expenses and higher rate relief on Gift Aid donations from some taxpayers.
Employment
For taxpayers that have employment expenses over £120 coded out, their 2026/27 codes will be amended to remove the expense if they meet one of the following criteria:
- no current PAYE income
- An employment gap of at least a tax year since the employment expense was claimed
- no self-assessment ‘footprint’ since 2021/22, where there are indicators that the expense should have been resubmitted via self-assessment
- employment expenses within the code are higher than the 2022/23 self-assessment return.
Where HMRC has data that indicates that the taxpayers’ circumstances have changed since they applied for employment expenses, HMRC is changing that tax code.
In addition, changes announced in the Budget regarding the withdrawal of tax relief on the costs of working from home presumably mean such expenses will also be withdrawn from coding notices.
Gift Aid
For taxpayers that receive higher rate relief on Gift Aid donations via their tax code, the codes will be amended to remove this from 2026/27 if they meet all of the following criteria:
- the same amount of Gift Aid relief has been coded for at least three years; and
- there has been no self-assessment ‘footprint’ for at least three years.
If a taxpayer believes that they remain entitled relief and/or employment expenses from April 2026, they should submit their claim to HMRC.
What seems to be happening is that HMRC are reviewing claims that have rolled on at the same level over several tax years. This could mean that several years expenses/relief have been overclaimed.
Of course, it could also mean such reliefs have been underclaimed. The moral remains, always check your tax code!