Helpful TipDid you know that if your employee is not reimbursed for travel or other things they buy for work they can claim tax relief?  

The tax relief is claimed online using form P87 which is accessible through their Personal Tax Account which they should be able to log in to.  The tax relief may not necessarily be a repayment of overpaid tax but is more likely to be a change in tax code meaning that they will pay less tax on their salary the following year.

The type of expenses which the employee could claim tax relief for would be:

  • Business mileage if they use their own car (45p can be claimed so if you pay less than this your employee can claim the difference)
  • Fuel for a company car
  • Travel and/or overnight expenses
  • Repairing or replacing small tools required for their work
  • Cleaning, repairing or replacing specialist clothing - for example protective clothing, uniform or safety boots
  • Professional fees and subscriptions which are approved by HMRC 

Whilst your employee can claim these expenses and reduce their tax bill, if you reimburse your employee for business expenses they have paid for themselves it would reduce your own tax bill as the expenses reduced your profit.