24 January 2026
HM Revenue and Customs (HMRC) has informed employer and payroll group forum members of an update to the annual coding process to include the removal of Employment Expenses and Gift Aid Higher Rate Relief from selected customers from April 2026.
“Employment Expenses
For customers that have employment expenses over £120 coded, their codes have been amended if they also meet one of the following criteria:
- no current PAYE income;
- an employment gap of a full tax year since the employment expense was claimed;
- no Self Assessment (SA) footprint since 2021/22, where there are indicators that the expense should have been resubmitted via SA; and,
- employment expenses within their code is higher than their 2022/23 SA return.
Where we have data that indicates that the customers circumstances have changed since they applied for Employment expenses, we are taking action to correct that tax code.
Higher Rate Gift Aid Relief
For customers that have Higher Rate Gift Aid Relief coded, their codes have been amended to remove the relief from 2026/2027 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 SA footprint for at least three years.
As the amount coded has not changed for at least three years, it is highly unlikely the customer has claimed or confirmed the relief via telephone, webchat or in writing. Our research indicates the majority of regular Charitable donations do not continue beyond 12-18 months.
If the customer believes that they remain entitled to Gift Aid Higher Rate Relief and/or employment expenses from April 2026, they should submit their claim via the normal BAU processes.”
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