Understanding the HMRC Expenses Claim Form P87: A Comprehensive Guide
Updated: Sep 7
What is a P87 Form?
The HMRC Expenses Claim Form P87 is a crucial document for employees in the UK who have incurred work-related expenses that were not reimbursed by their employer. This form allows you to claim tax relief on such expenses, but it comes with its own set of rules and guidelines. In this article, we'll delve into the intricacies of Form P87, covering eligibility criteria, the types of expenses you can claim, and how to fill out the form correctly.
If you're self-employed, you must inform HMRC about your expenses through the Self-Assessment process.
Who Can Use Form P87?
Form P87 is specifically designed for employees who meet certain conditions:
Not in Self Assessment: If you don't have to submit an annual tax return, you can use this form.
Employee Expenses: You should have spent your own money on allowable employment expenses that were not reimbursed by your employer.
Expense Limit: Your allowable employment expenses should be less than £2,500 for the tax year.
If you meet these criteria, you can proceed with the claim. If the claim is for the current tax year, HMRC will usually adjust your tax code. For previous tax years, you may receive a repayment by cheque.
Time Limit for Claims
You have up to four years from the end of the tax year to make a claim. For instance, for the 2023/24 tax year, you must make a claim by 5 April 2028. You can also make retroactive claims going back to the 2019/20 tax year.
Online vs Postal Submission
You have the option to complete and submit Form P87 online through the Government Gateway. Alternatively, you can download the form, complete it on your computer, print it, and post it to HMRC. If you opt for postal submission, make sure to retain a copy of the completed form for your records.
Since December 21, 2022, claims must include specific details such as all the information in section 1 (except for the title and contact phone number, which are optional), the employer PAYE reference number in section 2, and the type of industry if the claim includes flat rate expenses. Failure to include these details will result in the rejection of the form.
If you're claiming on behalf of someone else, for more than one tax year, or for more than one job, you must use the postal method. In the case of multiple jobs, you'll need to complete two forms if you have more than five jobs.
How Long will it Take to Process a P87 Claim?
The amount of time will depend on the kind of expense(s) you claim for. If you're claiming something that doesn't require proof and HMRC doesn't have to respond to your request for additional information, a claim will take anywhere from 6 to 8 weeks. If HMRC needs to respond to you with additional information, a claim for a P87 can be a lengthy process to finish. HMRC timings can vary because of the busier times of the year, especially during the tax year, which begins in April, and the self-assessment time in January.
What Evidence Do I Need to Provide with My P87 Claim?
In most instances, you'll require supporting evidence (like the receipt) from HMRC to complete your claim. If you're claiming a uniform cleaning allowance or an additional expense at a flat rate, evidence is not required in most cases. An application for a more intricate cost, like business mileage or equipment purchased for work, requires documentation of the expense. You can supply your proof as your P87 or a response to an HMRC request once you have completed your P87.
Types of Expenses and Filling Out the Form
In this section, we'll delve into the types of expenses you can claim using Form P87 and provide a step-by-step guide on how to fill out the form correctly.
Types of Expenses You Can Claim
Flat Rate Expenses: If you're claiming for work clothing and tools, you don't need to keep records or receipts, nor do you need to make annual claims.
Mileage Allowance: If you use your own vehicle for work and haven't been reimbursed by your employer, you can claim mileage allowance. You'll need to provide records of your business mileage, including locations and distances.
Professional Fees and Subscriptions: If your total expenses for these are less than £2,500, you can claim them.
Hotel and Meal Expenses: You'll need to send your receipts and provide details such as the date and location of your stay and the amount spent.
How to Fill Out the Form
Government Gateway Account: If you don't have an account, you can set one up as part of the claim process. This will also give you access to other government and HMRC online services.
Gather Information: Before starting your claim, gather all the necessary information, including details of the expenses you're claiming.
Complete the Form: Follow the on-screen instructions to fill out the form. Once completed, you'll receive a reference number to track the progress of your claim.
Download the Form: Download and save the form P87 on your computer. Open it using the latest free version of Adobe Reader. OR
Complete the Form: Fill out the form on-screen.
Print and Post: Print the form and post it to the address shown on page 8. Ensure you send all 8 pages; otherwise, your claim cannot be processed.
You can claim tax relief by phone if you've already claimed the same type of expense in a previous year and your total expenses are less than either £1,000 or £2,500 for professional fees and subscriptions. However, you cannot claim working from home expenses by phone.
How to Fill Different Sections of the P87 Form
The P87 form is a crucial document for claiming tax relief on employment expenses in the UK. This form is divided into various sections, each requiring specific information. Here's a detailed guide on how to fill out each section of the P87 form.
Section 1: Personal and Employment Details
Title: Enter your title, such as Mr., Mrs., Miss, Ms., or Dr.
Surname or Family Name: Your last name goes here.
First Names: Enter your first name(s).
Address and Postcode: Provide your current address.
Contact Phone Number: Optional, but recommended.
Date of Birth: Enter in DD/MM/YYYY format.
National Insurance Number: Mandatory if you have one.
Section 2: Employment Details
Employer PAYE Reference: Found on your P45/P60 or Personal Tax Account.
Job Title: Specify your job title, e.g., Carer.
Employer Name and Address: Include the first line of the employer's address and postcode.
Type of Industry: Needed only when claiming for flat rate expenses.
Employee Number: If applicable.
Section 3: Flat Rate Expenses
Here, you'll enter the flat rate expense deduction for each year ending 5 April. This is particularly useful for claiming work clothing and tools.
Section 4: Subscriptions to Professional Bodies
Name of Professional Body: Specify the organization.
Amount of Subscription or Fee: Enter the amount.
Amount Repaid to You: If any.
Expenses Claimed: The net amount you're claiming.
Section 5: Mileage Allowance
This section is divided into business mileage for cars and vans, motorcycles, and cycles. You'll need to provide the total business mileage and calculate the mileage allowance relief.
Section 6: Hotel and Meal Expenses
Where You Stayed: Location of your stay.
Amount Spent on Allowable Items: Include the amount.
Date or Number of Overnight Stays: Specify.
Amount Repaid to You: If any.
Total Expenses Claimed: The net amount you're claiming.
Section 7: Other Expenses
Here, you can enter any other amounts that you haven't already included on the form, which you had to pay solely for work purposes.
Section 8: Amount Repaid by Your Employer
Record any additional amounts you have received that are not already declared on this form.
Section 9: Total Expenses
Calculate the total amount of expenses you're claiming for each tax year. If the amount is less than £2,500, proceed to Section 10 and sign the declaration.
Section 10: How You Want to Be Paid
Specify if you want the cheque made payable to you or to a nominee.
After filling out all the sections, sign and date the declaration on page 7. You can then send the completed form to the address provided on the form.
By following these guidelines, you can ensure that you fill out the P87 form accurately, making the process of claiming your tax relief as smooth as possible.
Claims made on behalf of someone else or for more than five jobs must be done by post.
If you're a tax agent, you must have an agent services account to submit Income Tax or PAYE repayment claims on behalf of others and charge a fee for doing so.
As of May 2022, only HMRC P87 forms will be accepted for postal claims.
Common Mistakes, Tips, and Final Thoughts
In this concluding section, we'll highlight some common mistakes people make when filling out Form P87 and offer tips to ensure your claim is processed smoothly. We'll also touch on some recent updates to the form and what they mean for you.
Common Mistakes to Avoid
Incomplete Information: One of the most common reasons for claim rejection is incomplete or incorrect information. Make sure you fill out all the required fields.
Missing Receipts: If you're claiming expenses that require receipts, such as hotel and meal expenses, make sure to include them.
Incorrect Expense Types: Ensure you're claiming for allowable expenses. For example, you can't claim for regular commuting between your home and your permanent workplace.
Late Submission: Remember, you have up to four years from the end of the tax year to make a claim. Missing this deadline will result in your claim being invalidated.
Tips for a Successful Claim
Documentation: Keep all your receipts and records in an organized manner. This will not only make the claim process easier but also serve as proof if HMRC asks for verification.
Use the Correct Form: As of May 7, 2022, only HMRC's revised P87 forms will be accepted for postal claims. Make sure you're using the most up-to-date version.
Check Eligibility: Before starting the claim process, double-check that you meet all the eligibility criteria. This will save you time and effort in the long run.
Track Your Claim: If you submit your claim online, you'll receive a reference number. Use this to track the progress of your claim and ensure it's being processed.
Recent Updates and What They Mean for You
Flat Rate Expenses: A new section has been added that allows you to claim flat rate expenses without the need for records or receipts.
Claim by Phone: As of January 9, 2023, you cannot claim working-from-home expenses by phone.
Agent Services Account: If you're a tax agent, you must now have an agent services account to submit claims on behalf of others and charge a fee for doing so.
Understanding the HMRC Expenses Claim Form P87 can seem daunting, but with the right information and preparation, the process becomes much more manageable. Whether you're an employee looking to claim tax relief on work-related expenses or a tax agent assisting clients, this comprehensive guide aims to provide you with all the information you need to navigate the complexities of Form P87 successfully.
And there you have it—a complete guide to understanding and filling out the HMRC Expenses Claim Form P87. Good luck with your claim!
How a Tax Accountant Can Help You Claim Tax Relief on Your Expenses
Navigating the labyrinthine world of tax codes, forms, and regulations can be a daunting task for anyone. Whether you're an individual or a business owner, understanding how to claim tax relief on your expenses in the UK can be complicated. This is where a tax accountant comes into play. A tax accountant is not just a number cruncher; they are financial advisors who can guide you through the complex tax landscape, ensuring you take advantage of every tax relief option available to you. Here's how a tax accountant can assist you in claiming tax relief on your expenses in the UK.
Expertise in Tax Laws and Regulations
Tax laws are ever-changing, and keeping up with the latest amendments is a full-time job. A tax accountant is well-versed in the current tax laws, including those specific to the UK, and can provide expert advice on how you can benefit from various tax reliefs. They can identify which expenses are allowable and how to maximize your claims, ensuring you don't miss out on any opportunities to reduce your tax liability.
Personalized Financial Planning
Every individual or business has unique financial circumstances. A tax accountant can offer personalized financial planning tailored to your specific needs. They can assess your income, expenditures, and financial goals to develop a tax strategy that aligns with your objectives. This includes identifying the types of expenses you can claim tax relief on, such as professional fees, mileage, or even work-from-home costs.
Accurate and Timely Filing
Filling out tax forms can be confusing and time-consuming. One small mistake can lead to delays in processing your claim or, worse, a tax investigation. A tax accountant can meticulously prepare and file your tax returns, ensuring accuracy and compliance with the law. They can help you fill out complex forms like the P87 for claiming tax relief on employment expenses, making sure every section is completed correctly.
Assistance with Documentation
Proper documentation is crucial when claiming tax relief on expenses. You'll need to provide evidence like receipts, invoices, and mileage logs to support your claims. A tax accountant can help you organize these documents, advising you on what records to keep and for how long. They can also assist in digitalizing your records, making it easier to retrieve them if needed for an audit or review by HMRC.
Representation in Tax Audits
If you're unfortunate enough to be selected for a tax audit, having a tax accountant by your side can be invaluable. They can represent you in discussions with HMRC, providing all the necessary documentation and explanations to substantiate your claims. Their expertise can often expedite the audit process and may result in a more favorable outcome.
Ongoing Support and Advice
A tax accountant's role doesn't end once your tax return is filed. They offer ongoing support and can update you on any changes in tax laws that could affect your future claims. Many tax accountants also provide year-round consultation services, helping you plan your expenses and claims in real-time, rather than scrambling at the end of the tax year.
In conclusion, a tax accountant is an indispensable resource for claiming tax relief on your expenses in the UK. Their expertise in tax laws, personalized financial planning, and meticulous attention to detail can save you time and money, ensuring you make the most of the tax relief options available to you. Whether you're an individual or run a business, investing in a tax accountant can offer you peace of mind and financial benefits in the long run.