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What is the HMRC Mileage Expenses Claim Form in the UK?

 

Understanding HMRC Mileage Expenses Claim

The HMRC Mileage Expenses Claim Form is an essential document for individuals and businesses in the UK to understand and utilise effectively. This claim allows taxpayers to receive tax relief for business miles travelled using their personal vehicles, such as cars, motorcycles, or bicycles. This form of tax relief is particularly relevant for employees or self-employed individuals who use their vehicles for work-related travel, excluding regular commuting.

 


What is the HMRC Mileage Expenses Claim Form in the UK


HMRC is the P87 form

The HMRC mileage expenses claim form is an integral part of claiming mileage expenses in the UK, and it's important to mention it explicitly. The form used for claiming mileage expenses from HMRC is the P87 form. This form is designed for employees to claim tax relief on expenses not reimbursed by their employer, which includes business mileage.

 

Here’s how the P87 form fits into the process:


  1. Purpose of P87 Form: The form P87 is used by employees who incur work-related expenses, like business mileage, which are not reimbursed by their employer or are reimbursed below the approved HMRC rates.

  2. Completing the Form: When filling out the P87 form, employees need to provide details about their employment, total number of miles traveled, and the amount they have been reimbursed (if any). It’s essential to have accurate records to complete this form correctly.

  3. Submission Methods: The P87 form can be submitted online through the HMRC website or by post. For online submission, taxpayers need to log in to their Government Gateway account.

  4. Claim Limits: The claim for tax relief on expenses, including mileage, can be made for the current tax year and the four previous tax years, provided you were eligible to make the claim during those years.

  5. Record-Keeping Requirements: For the claim to be processed, detailed records of all business journeys must be kept, including dates, destinations, purposes of the trips, and miles travelled.

  6. Accessibility: HMRC provides different formats of the P87 form to cater to the needs of individuals using assistive technology, ensuring accessibility for all taxpayers.


In summary, the P87 form is a critical document for claiming mileage expenses in the UK. It is essential for individuals seeking tax relief on business mileage to understand how to accurately complete and submit this form. Keeping detailed records of business travel is crucial for filling out the form correctly and ensuring compliance with HMRC regulations.

 


The Details of the Role of HMRC Form P87 in Claiming Mileage Expenses from HMRC

The HMRC Form P87 is a crucial document for employees in the UK seeking to claim mileage expenses for work-related travel. This article delves into the importance, functionality, and impact of Form P87 in the process of claiming mileage expenses.

 

Introduction to HMRC Form P87

HMRC Form P87 is designed for employees to claim tax relief on unreimbursed expenses incurred due to employment. This includes expenses related to using personal vehicles for business purposes, known as mileage expenses. The form is an integral part of the UK's tax system, allowing taxpayers to recoup some costs associated with their employment.

 

Eligibility for Using Form P87

Form P87 is intended for employees who have incurred work-related expenses, including mileage, but haven't been reimbursed by their employer. This form is applicable for claiming expenses that exceed £2,500 in a tax year. For claims below this threshold, the process can be completed online or via telephone.

 

Understanding Mileage Expenses

Mileage expenses refer to the costs an employee incurs when using their personal vehicle for work-related activities, excluding the commute to and from their regular place of work. HMRC sets specific mileage rates that dictate the amount claimable per mile, ensuring fairness and consistency in claims.

 

Completing Form P87

Filling out Form P87 requires detailed information, including personal details, employer information, and specifics about the expenses incurred. The form is structured to guide taxpayers through different types of allowable expenses, including vehicle usage. Accurate record-keeping is paramount, as claimants must provide the total number of business miles travelled and the amount, if any, reimbursed by the employer.

 

Calculating the Claim

The claim calculation is based on the approved mileage rates set by HMRC. These rates are designed to cover the vehicle's running costs, including fuel, maintenance, and wear and tear. The current rates are 45p per mile for the first 10,000 business miles in a tax year and 25p per mile thereafter.

 

Impact of Form P87 on Tax Relief

Submitting Form P87 can result in significant tax relief for employees. The relief is calculated on the difference between the approved amount and what the employer has reimbursed, if anything. This process acknowledges the financial burden placed on employees using personal vehicles for business purposes and provides a mechanism for partial compensation.

 

Digitalization and Accessibility of Form P87

HMRC has made strides in making Form P87 easily accessible. The form can be downloaded, filled, and submitted online, simplifying the process. This digitalization ensures a more efficient, user-friendly approach to claiming mileage expenses.

 

Common Challenges and Solutions

One of the challenges in using Form P87 is maintaining detailed records of business travel. Taxpayers must ensure accurate logs of their mileage, including dates, destinations, and purposes of each trip. Consulting a tax professional can provide clarity and assistance in navigating these requirements.

 

The Role of Tax Professionals

Tax professionals play a vital role in assisting with Form P87. Their expertise ensures accurate completion and submission of the form, maximizing the potential tax relief. They provide valuable advice on record-keeping and can represent the taxpayer in communications with HMRC.

 

Form P87 in the Broader Context of Tax Compliance

The use of Form P87 highlights the broader commitment to tax compliance and fairness in the UK tax system. It represents HMRC's effort to balance the tax burden and acknowledge the costs borne by employees in the course of their employment.

 

HMRC Form P87 is a critical tool for employees in the UK to claim mileage expenses. It embodies the principles of fairness and support within the tax system, offering a structured and accessible means for employees to claim tax relief on necessary work-related expenses. The role of Form P87 extends beyond individual claims, contributing to a broader framework of tax compliance and equity. As work patterns and mobility evolve, the relevance and functionality of Form P87 continue to be pivotal in supporting the UK's workforce.


HMRC Mileage Expenses Claim Calculator



This calculator allows users to input their total business miles and calculates the claimable amount based on HMRC's standard rates. For a complex scenario, you will have to do manual calculations.



How to Fill P87 Form - A Step-by-Step Process

Filling out the HMRC Form P87 is crucial for UK taxpayers seeking tax relief on unreimbursed employment expenses, including mileage. This guide provides a step-by-step process to complete the form accurately.


1. Personal and Employment Details

  • Title and Name: Enter your title (Mr, Mrs, Miss, Ms, Dr) and full name.

  • Address and Contact: Provide your current address and contact phone number.

  • Date of Birth and National Insurance Number: These are required for identification.

 

2. Employment Details

  • Employer PAYE Reference: Found on your P45/P60 or Personal Tax Account.

  • Job Title and Employer Details: Include the employer's name and address.

  • Years of Claim: Specify the tax years for which you're claiming expenses.

 

3. Flat Rate Expenses

  • Expense Deduction: Enter the flat rate expense deduction for each year you're claiming, if applicable.

 

4. Subscriptions to Professional Bodies

  • Name and Amount: List any professional bodies you're subscribed to and the amount paid.

 

5. Mileage Allowance

  • Total Business Mileage: For cars, vans, motorcycles, and cycles, enter the total business mileage for each year.

  • Calculating Reimbursement: Use the HMRC rates (45p for first 10,000 miles, etc.) to calculate the amount. Provide the figures for mileage up to 10,000 miles and over 10,000 miles separately.

  • Total Mileage Allowance Payments Received: Enter the amount your employer reimbursed you, if any.

  • Mileage Allowance Relief: Calculate the total allowance relief (total claimable amount minus what your employer paid).

 

6. Hotel and Meal Expenses

  • Details of Stay and Expenses: If you have hotel and meal expenses related to business travel, provide details including the amount spent and repaid to you.

 

7. Other Expenses

  • Description and Amounts: List any other expenses related to your employment that haven't been covered in previous sections.

 

8. Amount Repaid to You by Your Employer

  • Type and Amount of Expenses Received: Record any additional reimbursements from your employer.

 

9. Total Expenses

  • Calculate Net Allowable Expenses: Sum up all the expenses for each tax year you are claiming.

 

10. Payment Information

  • Cheque Payee: Indicate if you want the cheque payable to you or a nominee.

  • Nominee Details: If applicable, provide the nominee’s name, reference, and address.

 

Declaration

  • Confirm Accuracy: Sign and date the form, confirming the information provided is accurate and complete.

 

Submission

  • Attachments: Attach any required documents, like mileage logs, if your employer hasn't reimbursed any of the costs.

  • Send to HMRC: Submit the completed form to HMRC via post. The address is provided on the form.

  • Keep Copies: Always keep a copy of the completed form and any attachments for your records.

  • Accuracy is Key: Ensure all information is accurate to avoid delays or issues with your claim.

  • Contact HMRC for Assistance: If you have questions or need clarification, contact HMRC's helpline.


This comprehensive guide aims to simplify the process of completing the P87 form, ensuring that UK taxpayers can efficiently claim tax relief on their employment expenses.

 


Eligibility and Requirements

The eligibility to claim this relief depends on the type of vehicle used and whether it's personally owned or a company vehicle. For personal vehicles, taxpayers can claim relief based on approved mileage rates set by HMRC. These rates cover the costs of owning and running the vehicle, including fuel, electricity, vehicle tax, MOTs, and repairs. However, it's important to note that separate claims for these expenses are not permitted.

 

Record-Keeping for Claims

Accurate and comprehensive record-keeping is crucial for a successful mileage claim. Taxpayers must document the start and end addresses of each trip, including postcodes, the distance travelled, and the amount of mileage allowance received from the employer. This meticulous record-keeping is vital not only for reimbursement but also as a safeguard in the event of tax-related inquiries or audits.

 

Approved Mileage Rates

For the 2024 tax year, the approved mileage rates are as follows:


  • Cars and vans: 45p per mile for the first 10,000 miles, 25p for each subsequent mile.

  • Motorcycles: 24p per mile.

  • Bicycles: 20p per mile. These rates are designed to cover the costs associated with the use of personal vehicles for business purposes, such as petrol, insurance, road tax, and general wear and tear.

 

Claiming Mileage Allowance

For self-employed individuals, the process involves multiplying the number of miles travelled by the flat rate and claiming on this total. For employees, the business mileage allowance is calculated by multiplying the miles by the specific rate per mile. If an employer reimburses at a rate lower than HMRC's approved rate, employees can claim the difference as tax relief.

 

Tax Implications for Employers For employers, reimbursing employees at the approved rates allows them to claim tax relief, effectively reducing their tax liability. This adherence to HMRC guidelines ensures compliance and optimises the financial health of the business.

 

HMRC Compliance and Technology Integration 

With technological advancements, tools like Tripcatcher have been integrated with accounting software to simplify the recording and monitoring of business mileage. These apps allow users to log mileage using GPS tracking and automate the entire process, ensuring compliance with HMRC regulations and making claims easier for both individuals and businesses.

 

Understanding and correctly applying the HMRC Mileage Expenses Claim is crucial for UK taxpayers. It not only ensures compliance with tax regulations but also maximises the financial benefits available through tax relief on business mileage. Accurate record-keeping and the use of technological aids can streamline the process, making it more efficient and less prone to errors.


Detailed Scenarios and Calculations for HMRC Mileage Claims

 

Scenario-Based Understanding

To better grasp the HMRC Mileage Expenses Claim, let's consider some scenarios. Suppose an employee travels 11,500 business miles in a year. According to the HMRC rates for 2024, the claim would be calculated as follows: 10,000 miles at 45p (the rate for the first 10,000 miles) and the remaining 1,500 miles at 25p. If the employer reimburses at a lower rate, say 15p per mile, the employee can claim the difference as tax relief.

 

Self-Employed Claims

For self-employed individuals, the process is slightly different. They must register their company and maintain accurate records of business travel. The claim involves multiplying the number of miles by the approved rate. This method simplifies the claim process, allowing self-employed individuals to focus on their business operations.

 

Mileage Log Book and Tracking

Maintaining a mileage log book is vital. This log should include all details of business journeys: dates, destinations, distances, and purposes. Modern solutions like mileage tracker apps automate this process, reducing manual work and ensuring HMRC compliance. For example, if an individual drives 2,000 business miles, and the employer reimburses at the HMRC rate of 45p per mile, the reimbursement would be £900 (2000 x £0.45).

 

Tax Relief Calculations

The rate of tax relief an individual can claim depends on their income tax bracket. For instance, if someone travels 10,000 business miles and claims at 45p per mile, the claim amount would be £4,500. If they pay tax at the basic rate of 20%, the tax relief would be £900 (20% of £4,500).

 

Special Considerations for Electric Cars

For electric cars, the HMRC mileage rates in 2024 remain the same: 45p per mile for the first 10,000 business miles and 25p per mile beyond that. These rates apply regardless of the vehicle's engine size or age, and the same detailed record-keeping is required.

 

Fuel Cards and Additional Savings

Taxpayers can further reduce business travel costs by using fuel cards. These cards allow drivers to fill up at discounted rates at participating stations. Fuel cards offer significant savings and provide detailed reports on performance and fuel efficiency, adding another layer of financial management for businesses.

 

Reporting Requirements for Employers

Employers need to be aware of the reporting requirements associated with mileage allowances. Payments over the 10,000-mile limit are classified as benefits and must be reported to HMRC using a P11D form. This ensures that any excess payments are appropriately taxed through PAYE.

 

Advisory Fuel Rates for Company Cars

For company cars, different rates apply. The Advisory Fuel Rates (AFR) set by HMRC are based on engine size and fuel type. These rates are updated quarterly and are critical for employers to stay compliant when reimbursing employees using company cars for business travel.

 

Navigating the HMRC Mileage Expenses Claim requires a solid understanding of the rules and regulations, as well as diligent record-keeping. Both employees and employers must stay informed about the latest rates and reporting requirements. The use of technology, like mileage tracking apps and fuel cards, can significantly ease the process of recording and claiming business mileage, ensuring compliance and maximising financial benefits.

 


Practical Tips and Key Takeaways for HMRC Mileage Claims

 

Practical Tips for Efficient Mileage Claim Management


  1. Use Technology Wisely: Leverage mileage tracking apps and digital logbooks. These tools automatically record trips, calculate mileage, and generate reports, ensuring accuracy and HMRC compliance.

  2. Keep Detailed Records: Document every business journey meticulously, including dates, start and end locations, distances, and purposes. This is crucial for both self-employed individuals and employees.

  3. Understand the Specifics for Electric Cars: If you use an electric car for business travel, remember that the HMRC mileage rates are the same as for petrol or diesel cars. Keep detailed records similar to conventional vehicles.

  4. Utilize Fuel Cards for Additional Savings: Employ fuel cards to reduce travel expenses. They provide discounted rates at fuel stations and detailed insights into fuel consumption and efficiency.

  5. Stay Updated with HMRC Rates and Policies: Keep abreast of the latest HMRC mileage rates and policies. These can change annually, and staying informed is key to maximising your claim and remaining compliant.

  6. Consult with Tax Professionals: If in doubt, consult with a tax professional. They can provide tailored advice, ensuring that your claims are maximised and compliant with current regulations.

 

Key Takeaways


  1. HMRC Mileage Expenses Claim is Vital for Tax Relief: It allows individuals and businesses to claim tax relief on business miles travelled using personal vehicles.

  2. Accurate Record-Keeping is Essential: Maintain detailed logs of all business travel to ensure successful claims and protect against tax-related inquiries.

  3. Approved Mileage Rates: For the 2024 tax year, the rates are 45p per mile for the first 10,000 miles and 25p for each subsequent mile for cars and vans. Motorcycles are at 24p per mile, and bicycles at 20p per mile.

  4. Tax Implications for Employers and Employees: Employers can claim tax relief on mileage allowances disbursed within the approved rates. Employees can claim tax relief on the difference if their employer reimburses them at a lower rate.

  5. Technology Integration for Simplification: Apps like Tripcatcher help automate mileage tracking and reporting, easing the burden of manual record-keeping.

  6. Special Considerations for Different Vehicle Types: Electric cars are treated the same as petrol or diesel cars for mileage claims, and company cars have different advisory fuel rates.

  7. Reporting Requirements and Fuel Cards: Understand the reporting requirements for mileage claims over 10,000 miles and use fuel cards for additional savings.

 

The HMRC Mileage Expenses Claim is an important aspect of tax relief for UK taxpayers. It requires a comprehensive understanding of the regulations, meticulous record-keeping, and staying updated with the latest changes in rates and policies. By following these guidelines and utilising available technology, taxpayers can efficiently manage their mileage claims, ensuring compliance and maximising financial benefits. Whether you are self-employed or an employee, understanding and effectively managing your HMRC mileage claim is key to optimising your tax position and reducing your travel costs.

 


How a Personal Tax Accountant Can Help You with Mileage Expenses Claim


How a Personal Tax Accountant Can Help You with Mileage Expenses Claim

Navigating the complexities of mileage expenses claims in the UK can be challenging for individuals unfamiliar with tax regulations. This is where a personal tax accountant becomes invaluable. They offer expert guidance, ensuring that you maximize your claims while remaining compliant with HMRC rules.

 

1. Expert Knowledge of Tax Laws and Regulations


  • Understanding of HMRC Guidelines: Tax accountants have a deep understanding of HMRC guidelines and can accurately apply them to your specific situation. They stay updated with the latest changes in tax laws, including mileage rates and allowable expenses, ensuring that your claims are always current and compliant.

  • Advising on Eligibility and Entitlements: Accountants can assess your eligibility for mileage claims and inform you about your entitlements. This includes differentiating between personal and business travel, a critical aspect of mileage expense claims.

 

2. Accurate Record-Keeping and Documentation


  • Maintaining Proper Records: Tax accountants can guide you on the proper way to maintain records of your business travels. This includes logging dates, destinations, purposes of trips, and the number of miles. Accurate record-keeping is crucial for successful claims.

  • Organizing Supporting Documents: They assist in organizing receipts, logs, and other supporting documents required for filing claims. This organized approach simplifies the process and is essential during HMRC audits.

 

3. Calculation and Optimization of Claims


  • Maximizing Your Claim: An accountant can help you calculate the maximum claim possible under the law. They ensure that you are utilizing the approved HMRC rates effectively, including the differentiation in rates for the first 10,000 miles and subsequent miles.

  • Minimizing Errors: With their expertise, accountants minimize the errors often made in self-calculations. This accuracy is vital in maximizing your claim and avoiding HMRC penalties for incorrect claims.

 

4. Assistance with Filling Out Forms


  • Expertise in Form P87: Tax accountants are familiar with the intricacies of the P87 form used for mileage claims. They can help fill out the form correctly, ensuring that all relevant sections are accurately completed.

  • Ensuring Timely Submission: They manage deadlines, ensuring that your claim is submitted on time. Late submissions can lead to missed opportunities for tax relief.

 

5. Dealing with HMRC on Your Behalf


  • Representation and Communication: Tax accountants can act as your representative with HMRC, handling all communications regarding your mileage claim. This is particularly useful if there are any queries or issues raised by HMRC about your claim.

  • Managing Audits and Inquiries: In the event of an audit or inquiry from HMRC, having an accountant is beneficial. They can provide necessary documentation and answers, ensuring that the process goes smoothly.

 

6. Providing Personalized Advice


  • Tailored Strategies: An accountant provides personalized advice based on your individual circumstances. This might include strategies on how to maximize your claims in future tax years.

  • Consultation on Business Travel: They can offer consultation on how to plan your business travel to maximize tax relief on mileage expenses.

 

7. Ongoing Support and Education


  • Educating Clients: Accountants educate their clients on best practices for mileage claims, offering insights into efficient ways to track and claim business mileage.

  • Year-Round Support: Unlike tax software, a personal tax accountant offers year-round support, answering questions and providing advice as needed.

 

8. Long-Term Financial Planning


  • Integrating Mileage Claims into Overall Tax Strategy: They integrate mileage claims into your broader tax strategy, aligning it with other aspects of your financial planning.

  • Future Tax Planning: Accountants can assist in planning for future tax years, considering changes in your business travel or vehicle usage.


In conclusion, a personal tax accountant plays a critical role in managing your mileage expenses claims in the UK. Their expertise not only ensures compliance with HMRC regulations but also maximizes your potential claims, offering peace of mind and financial benefits. By providing tailored advice, accurate calculations, and representation in communications with HMRC, they become an indispensable resource for effective tax management.


FAQs on How to Claim Mileage Expenses from HMRC

Q1: What is the first step to claim mileage expenses from HMRC?

A: Register for Self Assessment if you haven’t already, as mileage claims are part of your tax return.


Q2: Can I claim mileage for commuting to my regular workplace?

A: No, commuting to your regular place of work is not claimable.


Q3: How do I differentiate between business and personal travel?

A: Business travel is any journey that forms part of your job duties, excluding commuting. Personal travel is any journey for non-work-related activities.


Q4: Are there different mileage rates for different vehicles?

A: Yes, HMRC has different approved mileage rates for cars, motorcycles, and bicycles.


Q5: What records do I need to keep for claiming mileage?

A: Keep a detailed log of your business journeys, including dates, mileage, and the purpose of each trip.


Q6: How do I calculate the amount to claim for mileage expenses?

A: Multiply your total business miles by the HMRC approved mileage rate for your vehicle.


Q7: What if my employer already pays me a mileage allowance?

A: If your employer pays you less than the HMRC rate, you can claim the difference.


Q8: Can I claim for passenger payments?

A: Yes, HMRC allows an additional amount per passenger per business mile for carrying fellow employees in a car or van on journeys that are also work journeys for them.


Q9: What is the process if I use more than one vehicle for business?

A: You need to calculate and claim for each vehicle separately based on the miles covered by each.


Q10: Are there any time limits for making a claim?

A: You can claim for the current tax year and the previous four tax years.


Q11: Can I claim mileage expenses if I am part of a car-sharing scheme?

A: Yes, as long as the travel is for business purposes.


Q12: How do I submit a mileage expense claim to HMRC?

A: You can submit your claim via your Self Assessment tax return or Form P87.


Q13: What if I travel to a temporary workplace?

A: Travel to a temporary workplace can be claimed as business mileage.


Q14: Can I claim mileage for attending job interviews?

A: No, attending job interviews is not considered a business journey for mileage claims.


Q15: What happens if I get audited by HMRC?

A: Keep all records and documentation for at least 22 months after the end of the tax year. In case of an audit, these will be necessary for verification.


Q16: Can I claim for parking fees and tolls?

A: Yes, parking fees and tolls incurred during business travel can be claimed in addition to mileage.


Q17: How do I handle mileage claims if I have a company car?

A: For company cars, you claim the actual costs of business travel, including fuel, rather than using the standard mileage rates.


Q18: Can I amend a mileage claim after submitting it?

A: Yes, you can amend your claim by contacting HMRC or revising your tax return.


Q19: What if my employer reimburses me more than the HMRC rate?

A: If the reimbursement is more than the approved rate, the excess is taxable.


Q20: Is there a difference in claiming mileage for the self-employed?

A: Self-employed individuals claim their business mileage directly against their business profits, not as a separate tax relief.



 

 

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