We’d all love a job where our expenses were paid back to us! Working in a job where we could get all our travel, petrol or even food paid back to us would be a dream! – but it’s unlikely to happen for most of us. Most people are stuck paying for their travel to the office and all the other things we need to pay for, simply because it’s part of the cost of being employed; we need to get to and from work and we need to eat.
What might come as a bit of a surprise, however, is that the Government has a scheme set up for people who have to pay out extra expenses in order to do their work. This scheme, rather unimaginatively, is known as P87. It’s designed for unexpected or unreasonable low levels of expenses that somebody needs to pay out in order to do their job.
A typical example would be for somebody who’s required to go to different sites around the UK – say a construction worker or IT professional brought into different sites to troubleshoot problems. If these kind of employees don’t have their expenses reimbursed by their employer, then they could apply for P87 expenses. They could get mileage costs in their own car – or even fuel costs in a company car – and things like meal expenses or accommodation.
There are obviously rules involved – firstly, it’s only open to employees who pay tax, you can’t claim if you’re self-employed. Secondly, you can only claim tax relief, not the full amount back. If your mileage rate came to £100, you’d benefit by £32, which equals 20% Income Tax and 12% National Insurance. You also can’t claim for mileage to your normal place of work – if you need to commute to one place of work, that’s just something you need to pay for!
The scheme is designed to help out people who would be disadvantaged or left badly out of pocket just for the sake of being employed. As such, if your expenses run to over £2,500 in a year, you’ll most likely need to fill out a self-assessment form at the end of the year. The lower level of expenses for a P87 is for flat rate expenses, such as travel, meal expenses and even accommodation.
Many people may have heard about travel and subsistence relief being offered to agency workers who were working under overarching contracts of employment with umbrella companies, but this was closed down in 2016. The majority of temporary workers and contractors are no longer able to claim these expenses – specifically if you are ‘employed through an employment intermediary’ and are under direction, control or supervision. The system was seen as being open to abuse by the umbrella employers, some questionable providers even submitted claims on their employees’ behalf but didn’t pass on the tax relief!
If your boss suddenly decides to start sending you out across the UK – or even asks you to provide your own equipment or tools – but won’t reimburse you, then it’s worth remembering this little scheme exists and it’s not all doom and gloom!