Are you aware of the P87 form and its significance? The P87 form, better known as the Employee Expenses form, is an essential document provided by HMRC (Her Majesty’s Revenue and Customs) in the United Kingdom. It allows employees to claim tax relief on work-related expenses that haven’t been reimbursed by their employer. This article aims to provide you with a clear understanding of what the P87 form is and how it can benefit you. So, let’s explore this form together and discover its importance in ensuring you receive the tax relief you deserve.
Overview of the P87 Form
The P87 Form is an essential document used by individuals in the United Kingdom to claim tax relief on employment expenses. It is provided by HM Revenue and Customs (HMRC) and allows employees to offset some of the costs incurred in their jobs against their taxable income. By using this form, you can potentially reduce your tax liability, resulting in either a tax refund or lower tax payments.
Definition of the P87 Form
The P87 Form, also known as the “Tax Relief for Expenses of Employment” form, is a government document that enables employees to claim tax relief for work-related expenses that they have personally paid for and are not reimbursed by their employer. This form allows individuals to deduct eligible expenses from their taxable income, thus reducing their tax liability.
Eligibility for using the P87 Form
To determine if you are eligible to use the P87 Form and claim tax relief on your employment expenses, you need to understand the criteria set by HMRC.
Employment Expenses Eligibility
In order to be eligible for tax relief on employment expenses, your expenses must be incurred wholly, exclusively, and necessarily in the performance of your duties. This means that the expenses must be directly related to your job and not for personal use. Additionally, these expenses should not be reimbursed by your employer.
Non-Eligible Expenses
While some employment expenses are eligible for tax relief, there are certain types of expenses that do not qualify. Examples of non-eligible expenses include personal clothing, commuting costs, and expenses that have already been reimbursed by your employer. It is important to carefully review the list of eligible expenses to avoid making incorrect claims.
How to Access and Submit the P87 Form
Accessing and submitting the P87 Form is a straightforward process that can be done both online and offline.
Obtaining the P87 Form
To obtain a copy of the P87 Form, you can visit the official HMRC website and search for “P87 Form.” The form can be downloaded in a PDF format, which you can then print and fill out manually. Alternatively, you can request a physical copy of the form from HMRC by contacting their helpline.
Submitting the P87 Form
Once you have completed the P87 Form, you have several options for submitting it to HMRC. You can either submit it online through the HMRC online portal, or you can mail the form to the designated address provided on the form. Make sure to keep a copy of the completed form for your records.
Key Information Required on the P87 Form
When filling out the P87 Form, it is important to provide accurate and complete information. The form requires certain key details to ensure your claim is processed correctly.
Personal Details
The P87 Form requires you to provide personal information, including your name, National Insurance number, and address. This information is used by HMRC to identify you and process your claim effectively. Make sure to double-check the accuracy of these details before submitting the form.
Employment Details
In addition to personal information, the P87 Form also collects employment-related information. This includes your employer’s name and address, your job title and description, your employers PAYE reference number and information about any additional employment or self-employment you may have. These details help HMRC assess the legitimacy of your claim and determine the appropriate amount of tax relief you are entitled to.
Claiming Employment Expenses using the P87 Form
Understanding how to claim employment expenses using the P87 Form is crucial to maximize your tax relief.
Understanding Allowable Expenses
Before claiming any expenses, it is important to familiarize yourself with the list of allowable expenses provided by HMRC. Allowable expenses include costs incurred for tools, uniforms, professional subscriptions, and travel expenses related to work. By knowing which expenses are eligible, you can ensure that your claim is accurate and compliant with HMRC regulations.
Expenses Covered by the Form
The P87 Form covers a wide range of employment expenses that are eligible for tax relief. Some common expenses that can be claimed using this form include travel and subsistence costs, fees paid to professional bodies, and costs for necessary work-related equipment and tools. Remember to keep all relevant receipts and supporting documentation to substantiate your claims.
Calculating and Claiming Expenses
Once you have identified your eligible expenses, it is important to understand how to calculate and claim them accurately on the P87 Form.
Calculating Expenses
To calculate your expenses accurately, it is essential to keep detailed records of all relevant costs throughout the tax year. This includes retaining all receipts, invoices, and bank statements that demonstrate the amounts paid for eligible expenses. Organizing your records in a systematic manner will make it easier to calculate your total expenses correctly.
Claiming Expenses
When claiming your expenses on the P87 Form, fill in the appropriate sections and provide the requested information for each expense category. Be sure to include the total amount of each eligible expense. Double-check your calculations and entries to ensure accuracy. Submit the completed form to HMRC.
Potential Benefits and Tax Savings with P87
Utilizing the P87 Form can lead to significant benefits and tax savings, which can positively impact your financial situation.
Potential Tax Refunds
By claiming eligible employment expenses through the P87 Form, you may be entitled to a tax refund. This refund is based on the total amount of allowable expenses and your tax rate. Depending on the amount of expenses claimed, you could receive a considerable refund, providing much-needed financial relief.
Reduction in Tax Liability
Even if you don’t receive a tax refund, claiming employment expenses on the P87 Form can still reduce your overall tax liability. By deducting eligible expenses from your taxable income, you effectively lower the amount on which you are taxed. This can result in lower tax payments and potentially increase your take-home pay.
Frequency of Form Submission
The frequency of submitting the P87 Form depends on the nature of your expenses and your employment circumstances.
Regular Expenses
If you incur eligible expenses on a regular basis, it is advisable to submit the P87 Form annually or at the end of each tax year. This ensures that you claim relief for all relevant expenses incurred during the year and do not miss out on any potential tax savings.
Occasional Expenses
If you have occasional or one-time expenses that qualify for tax relief, you can submit the P87 Form as and when those expenses arise. It is important to submit the form promptly to avoid missing any filing deadlines and to ensure you receive the tax relief you are entitled to.
Important Deadlines
Knowing the submission and processing deadlines for the P87 Form is crucial to ensure your claim is processed in a timely manner.
Submission Deadline
The submission deadline for the P87 Form varies depending on your circumstances. For most individuals, the deadline is typically within four years from the end of the tax year in which the expenses were incurred. However, it is recommended to submit the form as soon as possible to avoid any potential delays or complications.
Refund and Tax Processing Deadlines
The processing time for P87 Form claims varies and is subject to HMRC’s workload. Generally, refund claims are processed within a few weeks to a few months. It is important to note that your refund may be delayed if HMRC has additional questions or requires further information to validate your claim. Remaining patient and ensuring you have provided all necessary documentation will help expedite the processing of your claim.
Pitfalls and Common Mistakes to Avoid
When completing the P87 Form, it is essential to avoid common pitfalls and mistakes that could hinder your claim’s success or delay its processing.
Incomplete or Inaccurate Information
One of the most common mistakes is failing to provide complete or accurate information on the P87 Form. Ensure that all sections are filled out correctly, and double-check your entries before submission. Providing incomplete or inaccurate information may result in delays or even rejection of your claim.
Incorrect Expense Claims
Another pitfall to avoid is making incorrect expense claims. It is important to understand which expenses are eligible and ensure that your claims align with HMRC guidelines. Claiming expenses that are not eligible or misrepresenting their nature can lead to penalties, investigations, and potential legal consequences. Take the time to thoroughly review the eligible expense list and consult HMRC resources if you are unsure.
In conclusion, the P87 Form is a valuable tool for employees in the UK to claim tax relief on their employment expenses. By understanding the eligibility criteria, providing accurate information, and adhering to HMRC guidelines, you can maximize your potential benefits and tax savings. Remember to keep detailed records, submit the form in a timely manner, and avoid common mistakes or pitfalls. Utilize the P87 Form to its full extent and unlock the opportunity for a tax refund or a reduction in your tax liability.