As an employee you are bound to incur work-related expenses at some point, be it for travel or for training. Your employer may or may not reimburse you for this and needless to say, it can be vexing. But, what if we tell you that you can claim tax relief on the costs you’ve borne from HMRC? All you’ve got to do is fill Form P87 and you will be on your way to get paid what you’re owed.
At Northants Accounting, we will assist you in answering the questions surrounding tax relief as an employee.
As an employee, you can claim relief if your allowable expenses of the current tax year are not more than £2,500. The benefits of HMRC Form P87 can be reaped, only if you are an employee working for a company.
You cannot use this form if:
- You’re self-employed
- Your self-assessment tax return is already completed
- The sum of your total expenses exceed £2,500 in a given year
- You’ve not paid any tax throughout the year, because that way HMRC won’t owe you a refund
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Using HMRC Form P87 To Claim Tax Relief
Tax relief can be claimed only if there has been no reimbursement from your employer for the expenses you incurred. If you’ve received a part of the reimbursement, for instance you were paid 25p per mile instead of HMRC’s approved mileage rate of 45p per mile – you can claim tax relief on the difference amount.
Your P87 form can be completed online or via a postal form. The following information will be required from your end in order to claim tax relief:
- Your National Insurance Number
- The PAYE reference of your employer and your employee number – these will be mentioned on your payslip
- All details related to your allowable expenses
- Your employer’s input towards the expenses you incurred
How Much Tax Are You Liable To Get Back?
The extent of tax relief that you will receive completely depends on the rate of tax you pay. For instance, if you’re a basic rate taxpayer who claims tax relief on £1,000 on allowable expenses, you are liable to obtain £200 which is 20% of £1,000.
If you file for tax relief claim for the current tax year, HMRC will adjust your tax code like it normally does and subtract less tax so as to account for this. If you’re claiming tax for a previous year, you’re likely to receive a cheque or bank transfer for the total amount you’re owed.
How To Evidence Your Claim?
You need to maintain clear records with receipts for expenses you wish to claim for. You don’t have to submit these along with your P87 form however; HMRC can very well ask you to produce evidence of your claim. For instance, if your claim is related to business mileage, you will have to keep records of the places and distances of all your work-related journeys.
At Northants Accounting, we help you to streamline all your tax-related woes and give you a clear picture of your finances so that you can use tax relief to its full extent.
Get in touch with us today to know how we can be of assistance!
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