What is a P87?
Definition of a P87
A P87 is a form that employees can use to claim Income Tax relief on money they spend on work expenses (sometimes referred to as ‘out-of-pocket expenses’). These expenses may include items such as professional subscriptions, work uniform, tools and business travel.
The P87 is available as a paper form but employees can also use an online equivalent on the HMRC website to claim tax relief on work-related expenses.
Who can use a P87 form?
You can use a P87 form to claim tax relief if you’re an employee of a business and the total value of expenses you’re claiming for is less than £2,500 for the tax year.
You may be able to claim tax relief for a variety of expenses, including:
- costs incurred while working from home, such as heating and electricity bills
- uniform and other work clothing
- vehicles used for work
- professional subscriptions and fees
- work-related travel
If your employer has fully reimbursed you for your expenses, you can’t claim tax relief for them. If your employer has not reimbursed you for your expenses, you can claim tax relief by doing one of the following:
- posting a completed paper P87 form to HMRC
- phoning HMRC (if you’ve previously claimed expenses for a different year)
- making a claim online using your Government Gateway user ID
Can self-employed people use a P87 form?
Self-employed people (i.e. sole traders and partners in a partnership) are not employees of a business and so cannot use a P87 form to claim tax relief. These taxpayers should instead claim for business expenses on their Self Assessment tax return.
Limited company directors are employed by the company they own and can use a P87 to claim tax relief.
More information about how to claim tax relief for employee expenses is available on the HMRC website.
Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.