If you are using your own vehicle for work and are being reimbursed less than 0.45p per mile by your employer then you are actually entitled to make a claim to HMRC for the difference. This is known as claiming tax relief.
Here is an example: John is a Healthcare worker who uses his own vehicle whilst traveling to see his patients. He starts his day at his home address in Warrington and then throughout the day visits 5 different patients throughout the Cheshire area. John keeps a log of the different postcodes that he has visited and at the end of the day totals them together. He calculates that his round trip for the day was 41 miles.
At the end of every week John provides his employer with a mileage log outlining his different journeys and his employer reimburses him 0.25p per mile. This is shown as his payslip.
By the end of the year John has clocked up 10,000 miles by visiting his patients and has only been reimbursed £2,500 by his employer. A colleague advises John that he is actually able to make a claim to HMRC for the difference (0.45p – the 0.25p that he has already been reimbursed by his employer), a tax relief claim of £2,000.
So how do you go about making a claim?
How you go about making your claim generally revolves around how much tax relief that you are looking to apply for. The rule of thumb is that if you were claiming less than £2,500 in tax relief then you would use HMRC form P87. A P87 is an expense claim form that covers smaller claims such as for washing your uniform, the home working allowance, and of course smaller mileage claims.
There are a few ways that you can make a claim using a P87. Your options are;
To make a claim online you will first need your Government Gateway logins. If you do not have these, then you will need to register with HMRC to get them.
Once logged in you will be presented with a series of questions. Please note, you will need to have your P60’s and also know exactly how much mileage that you are looking to claim for.
Claiming through the post
A somewhat old-fashioned approach, but HMRC will still allow you to make a claim through the post. A word of warning here, because of Covid 19 HMRC have a huge backlog of paper claims. Pre-pandemic you were looking at 8 to 12 weeks. Now, this is more like 8 to 12 months. As with most things, making a claim online is usually the way to go.
Claiming over the phone
The final option for submitting a P87 expense claim is to give HMRC a call. Please note, this option is only available when you have made an expense claim during a previous year. Before you a call make sure that you have a full copy of your mileage log… HMRC may want to see this as evidence.
Before calling it might be worth making sure that you have a little bit of free time. HMRC are struggling with labour shortages and also a backlog of outstanding claims so it may take a little while to get through to them to discuss your claim.
What if my mileage claim is over £2,500?
If your mileage claim is over £2,500 then this will need to be submitted on a tax return. Tax returns can get fairly complicated, and knowing what to claim isn’t always the easiest to understand. Shoebox specialise in larger value mileage tax refund claims. If you would like to discuss your claim complete the form on our ‘Mileage tax refund‘ page and one of our refund managers will give you a call to discuss your claim.