P87 – Getting What Is Due To You – You can only get tax relief for allowable expenses.
Expenses are allowable if they’re for the cost of:
- travelling you had to do whilst doing your job;
- other expenses you had to pay whilst doing your job – and which related only to doing your job
You can’t ask for tax relief if your employer has already reimbursed you for the expense in full and has agreed a ‘dispensation’ with HM Revenue & Customs (HMRC).
Getting tax relief for expenses if you don’t fill in a tax return
If you don’t have to fill in a tax return, you can get tax relief for your allowable expenses by:
- filling in form P87 Tax relief for expenses of employment; or
- phoning HMRC directly.
The first time you ask for tax relief for your expenses you’ll have to contact HMRC in writing. To do this you should complete a form P87. The form asks for details about your expenses and how you worked out the amount you want to claim.
If you have more than one job, or if you change jobs during the tax year, you’ll need to fill in a separate form P87 for each job.
Currently the form is paper based, but HMRC are trialing an online version, which you may want to try by following the link from http://www.hmrc.gov.uk/forms/p87form.htm
The most common expense/relief claimed relates to business mileage and particularly when undertaken in an employee’s own vehicle. This is also known as AMAP (Authorised Mileage Allowance Payments) relief and you will need to provide details of:
- Total business mileage
- Split between the first 10,000 miles, and
- Business miles over 10,000 miles
- Mileage allowance relief
Completed Forms P87 need to be sent to: HM Revenue & Customs, Pay As You Earn, PO Box 1970, Liverpool, L75 1WX.
If you phone HMRC to ask for relief for your expenses they will only be able to give you tax relief if all of the following conditions are met:
- your expenses are less than £1,000 (or £2,500 for professional fees and subscriptions)
- you’ve claimed them in a previous tax year for the same employment
- HMRC has accepted your earlier claim
- you haven’t already been sent a P87 to complete
If you meet the conditions, HMRC will give you tax relief right away and repay any tax you’ve overpaid. Otherwise, you’ll have to fill in form P87 before they can allow your claim.
Time limits for getting tax relief
Time limits for getting tax relief if you don’t complete a tax return are shown in the table below:
|Tax year||Tax year ended on||You must claim by:|
|2010 to 11||5 April 2011||5 April 2015|
|2011 to 12||5 April 2012||5 April 2016|
|2012 to 13||5 April 2013||5 April 2017|
|2013 to 14||5 April 2014||5 April 2018|
How you get your tax relief
The way that you’ll get relief for your work expenses depends on the amount of your claim.
Claims up to £2,500
If your claim is £2,500 or less, HMRC normally gives you relief for your expenses through your tax code straight away. If you claim an estimated figure, they will review it at the end of the year. They will make any adjustments that are needed in your tax code for the next tax year.
Claims over £2,500
If your expenses claim is for more than £2,500, HMRC will give you relief in your tax code for the current year and for the next one – and send you a tax return to fill in. They will also check your tax calculation for the previous year.
Getting it right
When you submit your claim to HMRC you must declare that “The information I have given on this form is correct and complete to the best of my knowledge and belief.” If HMRC later find the information to be inaccurate or incomplete then can recover the tax from you plus interest and penalties.
It is vital therefore that you ensure that all of your information is correct and/or that the information that you give to your employees, upon which they may base a claim is complete and correct.
One option is the use of innovative GPS technology, which aids the maintenance of accurate records in a fraction of the time taken to complete ‘traditional’ paper based or online records. Also, the driver is in control of the data and so ‘Big Brother’ issues associated with off the shelf telematics solutions is also managed. The driver simply hides the detail associated with the private trips but still retains a full audit trail of the business trips to support their claim (see below). Finally the system holds details of the trip reason and ‘friendly’ names etc. making it easier and easier to use.
Soon your business mileage recording could look like this:
0845 600 6880
or visit our web site: www.peakmiles.com