Using P87 to claim tax relief on expenses

If you’re an employee receiving less than £2,500 a year in business expenses, it may be worth finding out if you can claim more by completing a P87 tax form.

The P87 allows you to claim tax relief if your employer hasn’t reimbursed you for your expenses though if you’ve received only partial reimbursement – such as 26p per mile rather than HMRC’s approved mileage rate of 45p per mile – can you claim tax relief on the difference.

What expenses are allowed?

Tax relief can be claimed on the following work-related expenses:

• Miles travelled using your own vehicle (though travel between your home and permanent workplace cannot be claimed)
• Actual fuel costs for business miles in a company vehicle
• Hotel and meal expenses
• Business phone calls in hotels
• Cleaning, repair or replacement of specialist clothing and small tools you need to do your job
• Professional fees or subscriptions to approved professional organisations
• Parking, toll fees and public transport costs

If you’re not sure whether you can claim tax relief on a particular expense, do keep a detailed record and a copy of your receipt so that it can be checked before you make your claim.

Submitting a P87

The P87 can be completed online or via post – you’ll need to provide your National Insurance number as well as your employer’s PAYE reference and your employee number, both of which are on your payslip.  You’ll need to provide details of your allowable expenses and will need to highlight any employer contributions.  It’s important to keep receipts for anything you wish to include in your claim – you don’t have to submit them, but you must be able to evidence every item in your claim.

How much will you receive?

The amount you get back will depend on what rate of tax you pay.  If you’re a basic rate taxpayer, then you’ll get back 20% of your total costs.  So, if you have allowable expenses of £2,000 then you’ll receive £400 tax relief.  If you’re claiming for the current tax year, then HMRC is most likely to adjust your tax code and deduct less tax to account for the expenses claim.  If you’re submitting a retrospective claim, however, you’re likely to receive what you’re owed via cheque or bank transfer.

Please note that the P87 cannot be used by people who are self-employed or if your claim exceeds £2,500.  In these circumstances you’ll need to fill in a Self-Assessment Tax Return.

Need help claiming your work expenses?

It can be daunting to claim tax relief on work-related expenses so if you need further assistance or need additional information, please do get in touch with our team of specialist contractor accountants on 01244 684700.