If you're a UK taxpayer who uses their own vehicle for business travel, you can claim mileage expenses using HMRC's P87 form. This form helps you calculate and claim tax relief on the cost of fuel, vehicle maintenance, and other related expenses. Here's a comprehensive guide to help you understand and complete the HMRC mileage claim form P87.
Before we dive into the form, let's briefly understand why mileage claims are important. As a business owner or employee, you can be reimbursed for the business mileage you've covered using your personal vehicle. This not only helps you save money but also ensures you're not out of pocket for work-related travel expenses.
Understanding HMRC's Mileage Rates
HMRC provides fixed mileage rates for different vehicle types to simplify the claim process. These rates cover all your vehicle running costs, including fuel, insurance, servicing, and depreciation. Understanding these rates is crucial before you start claiming.
Here are the current HMRC mileage rates for cars and motorcycles:
- Cars or vans: 45p per mile for the first 10,000 miles, then 25p per mile thereafter.
- Motorcycles: 24p per mile.
Cars and Vans
For cars and vans, you can claim 45p per mile for the first 10,000 miles in a tax year. After that, the rate drops to 25p per mile. This means you can claim up to £6,300 in tax-free mileage allowance per year for cars and vans.
For example, if you've driven 15,000 miles for business purposes, you can claim 45p for the first 10,000 miles and 25p for the remaining 5,000 miles. That's a total of £6,300 (10,000 miles * 45p) + £1,250 (5,000 miles * 25p) = £7,550.
Motorcycles
For motorcycles, the mileage rate is fixed at 24p per mile. There's no limit to the number of miles you can claim, but you can only claim for business travel, not for commuting between home and your permanent workplace.
For instance, if you've driven 5,000 miles on your motorcycle for business purposes, you can claim £1,200 (5,000 miles * 24p).
Filling Out the HMRC P87 Form
Now that you understand the mileage rates, let's look at how to fill out the HMRC P87 form. You can download the form from the HMRC website or use their online service. Here's a step-by-step guide:
1. **Employee or self-employed**: First, you need to indicate whether you're an employee or self-employed. If you're an employee, your employer will usually submit the claim on your behalf. If you're self-employed, you'll submit the claim yourself.
Employee
If you're an employee, you'll need your employer's name, address, and employer reference number. You'll also need to provide your National Insurance number and the tax year for which you're claiming.
For example, if you're claiming for the tax year 2021/22, you'll select '2021' from the drop-down menu.
Self-employed
If you're self-employed, you'll need your unique taxpayer reference (UTR) and the tax year for which you're claiming. You'll also need to provide your National Insurance number.
For instance, if you're claiming for the tax year 2021/22, you'll select '2021' from the drop-down menu and enter your UTR number.
Vehicle details
Next, you'll need to provide details about the vehicle you used for business travel. This includes the make and model, registration number, and vehicle type (car, van, motorcycle, etc.).
You'll also need to indicate whether you're claiming for a vehicle provided by your employer or one you own.
Mileage details
Here, you'll need to provide the total business miles you've covered in the tax year. You'll also need to indicate whether you're claiming for the full tax year or just a part of it.
For example, if you've driven 12,000 miles for business purposes in the tax year 2021/22, you'll enter '12,000' in the 'Total business miles' field.
Claiming capital allowances
If you're self-employed and claiming capital allowances, you'll need to provide additional information. Capital allowances are a way of allowing businesses to write off the cost of certain assets against their taxable profits.
If you're claiming capital allowances, you'll need to provide the date you started using the vehicle for business purposes and the cost of the vehicle.
Once you've filled out the form, you can submit it online or print it and send it to HMRC. If you're an employee, your employer will usually submit the claim on your behalf. If you're self-employed, you'll submit the claim yourself.
Remember, it's crucial to keep accurate records of your business mileage. This includes dates, destinations, and mileage for each trip. HMRC may ask to see these records at any time, so it's important to keep them safe.
In the ever-evolving world of tax regulations, it's always a good idea to stay informed about changes that might affect your mileage claims. Regularly check the HMRC website or consult with a tax professional to ensure you're claiming the correct amount.
Happy claiming, and safe driving!