Employees in the UK can use the P87 form to claim tax relief for their work expenses like work uniform, business travel, professional fees, etc, that their employer doesn’t reimburse.
Here in this article we will be discussing the P87 form and what all do employees need to complete the form. Let’s get started:
What is a P87 form?
As an employee, you may incur expenses like training, travel, etc, which your employer doesn’t pay you. However, aP87 form allows employees to claim tax relief from the HMRC, for their work-related expenses. All you just need to fill out the Form P87 to be paid what you’re owed.
When can you use P87 form?
You are eligible to claim for your work-related expenses vis the form if:
- You’re an employee
- You do not have to submit an annual tax return
- Your allowable expenses are less than £2,500 for the tax year
When can’t you use HMRC Form P87?
You cannot use the P87 form if:
- You’re self-employed
- Your self-assessment tax return is already complete
- Your total expenses exceed £2,500 in a given year
- You’ve not paid any tax throughout the year
What all can you claim tax relief for?
You can use the P87 form to claim tax relief for the following work expenses:
- Total miles travelled for work purposes using your own vehicle (car, van, motorcycle or cycle). You can’t claim if the distance travelled is between your home and a permanent workplace.
- Fuel costs that you’ve paid for business journeys in a company vehicle
- Professional, consulting fees
- Subscriptions offered to approved professional organisations
- Hotel and meal expenses and business phone calls in hotels
- Parking, toll fees and public transport costs
- Expenses associated with working at home
- Cleaning, repair or replacement of specialist clothing and small tools you need to do your job.
You can either provide evidence of your expenses and claim the full amount of exactly what you’ve spent or you can go for a ‘flat rate deduction’ if you don’t have evidence of your expenses. You can claim flat-rate deduction on the following:
- Professional subscriptions
- Anything else you bought for your job.
How to use HMRC Form P87 To Claim Tax Relief?
You can use Form P87 to claim tax relief for four years from the end of the tax year. For example, to claim tax relief for the year 2020/21, you need to make a claim by 5 April 2025.
You can make a claim only if your employer hasn’t reimbursed you. In case of partial reimbursement, you can claim tax relief on the difference between HMRC’s approved rates and the amount your employer paid you.
You’ll need to provide the following information to claim tax relief, either through online form or postal form:
- Your National Insurance Number
- The PAYE reference of your employer and your employee number(mentioned on your payslip)
- Details related to your allowable expenses
- Your employer’s contributions towards the expenses you incurred
How much will you get back?
The tax relief amount you’ll be paid will depend on the rate of tax you pay each year. For example, if you’re a basic rate taxpayer claiming tax relief on £1,000 of allowable expenses, you’ll receive £200, that is 20 percent of £1,000.
If you’re claiming tax relief for the ongoing tax year, HMRC will adjust your tax code and deduct less tax to take account of this. If you’re claiming for a previous year, you’ll likely be receiving a cheque or bank transfer for the total amount owed.
How to evidence your claim?
You’ll need to maintain records and receipts for all expenses that you’re claiming or wish to claim. You don’t need to provide all such receipts along with the P87 form, however, the HMRC will ask to produce evidence of your claim.
As an example, if you’re claiming for business mileage, you’ll need to keep records of all the locations and distance travelled, of all your work-related journeys.