Claiming your full travel expense entitlement - HMRC Form P87
Form P87 allows employees to reclaim business expenses which their employer is not reimbursing.
In order to qualify to use this form you must be :
· an employee and
· your total allowable expense in any tax year must be less than £2,500.
Form P87 allows an employee to claim for a variety of work-related expenses but this blog will concentrate on Travel expenses.
Employees who travel for work using their own cars are entitled to claim a tax-free mileage allowance of
· 45p per mile for the first 10,000 miles and
· 20p per mile over and above that.
Here’s an example of how this works
Let’s say you travelled 5,000 miles for work in 2018/19.
Your employer paid you a “car allowance” of £2,500 but put it through the payroll and deducted tax and national insurance from it.
In addition, they paid you 12p per mile for all your business mileage.
The “car allowance” does not count towards your mileage allowance – that is effectively part of your salary.
You are entitled to claim 45p per mile but are only receiving 12p so you can use Form P87 to claim for the difference – ie 33p per mile.
By competing Form P87 online you could reclaim between £330 and £660 depending on whether you pay tax at basic or higher rate.
If your expenses are higher than £2,500 (which they would be if you did 6,000 miles at 45p per mile ie £2,700) the only way to claim for the tax refunds is by registering for Self-Assessment and completing a SA Tax Return.
Two additional things worth pointing out are that :
You can use both Form P87 and the Self-Assessment system to claim for the last four tax years and
You must have detailed mileage records of dates, journeys and distances travelled to back up any claim.
You can fill in Form P87 Online using this link
If you are unsure about how to claim your full entitlement to business expenses, please contact me at email@example.com or call me on 0794 167 4936.