If you have been reimbursed for expenses you have incurred in the process of doing your job, such as the cost of the use of your home telephone or the use of your own vehicle for business travel, you will have to pay tax on the payments your employer has made to you. However, you may also be able to get tax relief for your expenses, which in effect, will cancel out the tax you are due to pay. The vehicles for which you may be able to get tax relief if used for work include: car, van, motorcycle or cycle. There are different thresholds for how much your expenses claims can total before you should pay tax on them, but you will not get a refund from HMRC unless you make a refund application.
If you are unsure if you qualify for relief against tax paid on reimbursed expenses for the cost of business travel using your own vehicle, you can find out by contacting HMRC and they will advise you. If you get a tax return, then you can apply for your relief by entering the appropriate amount on the return. If you do not get a tax return, then you will need to contact an HMRC office and request a P87 form, which you must then complete and return to HMRC. The amount of your claim will determine the way that you will get your tax relief for expenses. There being two options, based on whether your claim is above or below £2,500.
How You Will Receive Refund For Claims Under £2,500.
If your claim is £2,500 or less, you will usually get your relief for your expenses straight away from HMRC through your tax code. However, this can only be actioned straight away if it is based on a defined amount. If you have to make your claim based on an estimated figure, then you will need to wait till the end of the year, when HMRC will then review it. Any subsequent adjustments to your tax code that are required will then be made in time for the next tax year.
How You Will Receive Refunds for Claims Over £2,500.
If your expenses claim is for more than £2,500, HMRC will give you relief in your tax code for the current year and for the next one, and send you a tax return to fill in. They will also check your tax calculation for the previous year.
In working out the total amount of your claim, you must be able to substantiate any information provided. If employees benefit from tax relief to which they were not rightly entitled, then HMRC will endeavour to recover this and you may be liable for penalties or a surcharge. The amounts you can claim for mileage relief are based on set rates per mile for specific types of vehicles, so make sure you are using the right calculations.
Use our free calculator to find out how much income tax you could be entitled to reclaim.Calculate Tax Rebate