I’ve updated this post on 31 July 2020 for the latest legislation
What is a P87?
A P87 is an HMRC form that you need to use to claim income tax relief on certain employment expenses. These expenses are the ones that you are required to pay for yourself by your employer but you use for work purposes.
Naturally HMRC is quite prescriptive about which ones they will give your tax relief on but the most popular one at the moment that people are claiming for with a P87 form is working from home due to Coronavirus.
You’ll need to complete the form online on the HMRC website. You can choose to claim online or print and post the form to them.
What Employment Expenses Can You Claim on a P87?
You can claim for a tax deductions for the following expenses:
- Work uniform (follow this step-by-step guide to claiming the uniform tax rebate)
- Safety clothing
- Business travel
- Business mileage starting at 45p per mile for cars (follow this step-by-step guide to claiming the work mileage tax rebate)
- Professional fees
- Working from home
How Much Can You Claim Working From Home
At the moment we have all been asked by our employers to work from home due to Coronavirus.
If you have been asked to work from home then you can claim tax relief for the extra cost incurred for things like utilities and broadband.
It’s tricky to work out the exact amount you can claim and you’ll need to keep receipts as well as detailed workings of how you calculated the amount of tax deduction you are entitled to.
To make it easy, HMRC let you claim a flat rate instead. The amount you can claim is:
- £4 per week to 5 April 2020
- £6 per week from 6 April 2020
You can claim the HMRC working from home allowance in two ways:
Via Your Employer
Your employer can reimburse your tax-free through your payslip. To do this you’ll need to check that your employer is signed up to this scheme and then you’ll need to keep receipts to support your claim.
Via HMRC Online with a P87 Form
You can head over to HMRC, set up an online account if you haven’t already and make your claim for the working from home allowance, as well as any other expenses you may have incurred like mileage.
You cannot claim a tax deduction for working from home unless your employer has specifically requested you to do this, like in the case of coronavirus. If you choose to work from home, but your employer provides you with a place to work, you cannot claim tax relief.
How to Claim Income Tax Relief
To claim online, head over to the HMRC website and fill out the P87 online through your personal tax account (you’ll need to set one up if you don’t have one).
Claim By Post
To claim by post, you’ll need to complete a different version of the P87 form, then print and post it to HMRC (the address is on the form)
Claim by Phone
To claim by phone, call HMRC on 0300 200 3300. You’ll need to have your national insurance number ready to confirm your identity and you can only claim your tax relief this way if:
You claim expenses in the previous year and your total expenses are less than £1,000 (or £2,500 for professional fees and subscriptions).
How Much Tax Rebate Will You Receive?
Your tax rebate will depend on:
- The highest rate of tax you pay
- The amount you are entitled to claim for
- Which tax years you are claiming
A tax year runs from 6 April to 5 April each year, meaning there are changes to tax allowances and reliefs.
In the case of working from home, it rose from £4 week to £6 week on 6 April 2020. That means if you were working from the time that we went into Lockdown in the UK on 23 March you’ll be able to claim:
- 2 weeks at £4 per week
- £6 per week from 6 April until you went back to your office
Let’s say you went back to your office on 1 June, you’ll claim income tax relief for working from home of £56 (2 weeks x £4 plus 8 weeks at £6). If the highest rate of tax you pay is 20%, you’ll receive a tax rebate of £11.20 (£56 x 20%).
What does a P87 Form Look Like?
One form relates to one tax year. That means if you are claiming for different tax years, you’ll need to complete more than one form.
The P87 form is divided into different sections. You only need to complete the ones relevant to your claim. The sections are:
- Tax Year of Claim;
- Personal and Employers Details – you’ll need to provide details of your employer, including their HMRC reference which you will find on a payslip;
- Flat Rate Expense Claim for Uniforms
- Vehicle Expense Claim, including work mileage
- Professional subscriptions
- Hotel and meal expenses
- Other expenses
- General expenses
How Is Your Tax Rebate Paid?
Once you have sent in your form, HMRC will process your claim. They will then contact you and your employer. They will send you notification of a new tax code that needs to be used, which will reduce the amount of tax you pay so you will recoup what you are entitled to.