HM Revenue and Customs (HMRC) have recently released a new form P87 to help standardise tax relief on work-related expense claims.
What is a form P87?
An employee can submit a form P87 to claim tax relief on employment expenses that they are liable for in the course of their employment. For example, an employee can claim for professional subscriptions, professional fees, mileage, laundry or working from home expenses, the latter becoming more popular in recent years.
An employee can only use a form P87 if their total allowable expenses are less than £2,500 for the tax year. If an employee’s expenses exceed this figure the employee should be completing a self-assessment tax return to claim any associated income tax relief.
Historically, there has been no definitive method of claiming income tax relief relating to employment expenses. Previously, it was possible for an individual to phone HMRC, use the online service facility, send a letter or use a substitute claim form. HMRC have recognised that they currently receive a wide variety of applications from claim agents and individuals and that HMRC’s systems cannot cope with this, thereby slowing down the refund process.
What is different about the new form P87?
In a move to making the claim process more efficient and automated, HMRC have now issued a new form P87. HMRC are hoping that by encouraging everyone to use the same claim form, it will enable their systems to scan the forms and immediately identify the necessary information, with minimal human involvement.
By setting up a standard approach, HMRC are confident that this will make the process more efficient, help towards the system becoming fully automated, enable them to process repayments quicker and ensure that any coding adjustments are processed.
Following consultation and feedback from agents, HMRC have also updated the claim form so an individual can submit multiple tax years and employment details within the same claim. This is a welcome change, hopefully reducing the administration burden on the individual as well as HMRC as previously individuals would have had to submit separate forms for each tax year and each employment.
To further speed up the refund process HMRC have also included a space to complete a nomination. HMRC have advised that this will be the quickest way they can make payments to nominated payees going forwards so it is important that this section is completed.
When do the changes come into effect?
The new form is compulsory to use from 7 May 2022 and HMRC will reject any substitute claim forms they receive after this date. It is still possible for an employee to claim via post or via HMRC’s online services and further details on the new form can be found at https://www.gov.uk/guidance/claim-income-tax-relief-for-your-employment-expenses-p87#claim-online.
It is worth noting that in order to complete the form online, the individual will require a government gateway login.
Should you require any help completing the new claim form please do not hesitate to get in touch with a member of our team.