Some Tax Tips Every Employee Needs To Know About!

Ray Stewart General, Tax Matters Leave a Comment

I was speaking with a former client on Friday about how mean his new employers are when it comes to paying genuine expenses incurred on the employers business.

For example, they only pay 20p per mile for business travel in own cars, they pay for hotel rooms directly but do not allow any claim for food whilst away.

In this job he spends most of each week away on site and so his expense claims not being met by the employer are considerable.

I hadn’t realized how few employees know about a little form from the Tax Office known as a P87.

You can find the 2007/08 version of the form on the Tax Office website here.

So what it this form useful for?

Let’s start with the mileage claim. The approved rate an employer can pay employees for business use of their private vehicle is 40p/mile for the first 10,000 miles each tax year and 25p/mile above that level.

For the chap I was talking to, his employers pay 20p/mile and so he is missing out on 20p/mile for the first 10,000 miles and 5p/mile thereafter.

So, if he travels just 10,000 miles a year on business, he is losing out on £2,000 of tax free allowance at the moment, all because the employer will not pay the full allowable amount.

So he is now filling in the P87 form for all his business travel since he started in that job in December 2006 and is due a tax refund of £5k plus.

His claim is also made up of food bought whilst away, tools that he has had to buy, his professional organization subscription, calls made on his own mobile phone for work purposes and for buying and laundering the special overalls he needs to protect his clothing.

This form, as you can see, is really useful to most employees whose employers will not give their workers the full benefit of the tax breaks that are available – and let’s be honest, there are precious few of those!

The main thing to remember with this form is RECEIPTS and evidence. The Tax Office will accept all reasonable claims from employees but you must have evidence to back up your claim or you risk the whole thing being thrown out and jeopardizing your future claims as well.

You must have a systemized way of recording your business mileage that stands up to scrutiny, and have receipts for every meal, every tool, every boiler suit, every subscription that you want to claim relief for.

However, as you can see with the mileage claim above, the benefits of recording and claiming for every single item your employer will not fully repay you for can be very substantial indeed.

If you would like any further explanation of this article, or help in completing your claim form, please do not hesitate to contact me on 0800 047 0731.

~Ray

Ray Stewart
I am a qualified Certified Practising Accountant having passed my final exams way back in 1981. I actually can’t believe that was 37 years ago!! Anyway, I am now in my 60’s and I have been running my own business since May 1983. And before you ask, no, I have never regretted a moment of it! Part of the membership requirements of my professional body now dictate that I spend quite a lot of time on “CPD” - continuing professional education (one of their better ideas) - and over the last two years I decided to study business growth and marketing. I have learnt such a lot and that knowledge has radically changed my old “accountants” approach to business. It has made such a difference to the way I work and operate I feel that I just have to pass on this knowledge. It is simply too powerful to hold back!! - but I will try and do it in simple terms rather than expecting you to spend hours, as I had to, working through the difficult language that trainers seem to use to pass on their concepts. I hope you find the blog a useful resource and interesting place to visit as the months pass. I will do my best to keep up the flow - but if there are any topics you would like me to cover, then please let me know. Ray Stewart
Ray Stewart
Ray Stewart

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