How do I claim mileage tax relief on a P87?

Employed individuals can use the form P87 to reclaim tax relief on mileage costs back from HMRC.

Determining your eligibility for mileage tax relief in accordance with HMRC booklet 490 employee travel, section 4.7. is crucial before submitting your claim.

PAYE employees can claim for mileage through either a P87 form (for claims under £2,500) or a self assessment tax return (for claims of £2,500 or more).

HMRC approved mileage rates (AMAP) exist specifically to help you cover the costs of owning and running your vehicle for work purposes including:

• Fuel (petrol or diesel).
• Electricity costs.
• Vehicle servicing and repairs.
• Regular maintenance.
• Vehicle depreciation.
• Insurance and road tax.

A less common way of claiming for mileage on a P87 is the actual cost method which is worth considering before starting your claim.

You can use the same P87 form to include any other job related expenses like uniform washing or professional fees.

Our guide will cover the essential aspects of the claims process, from understanding what qualifies as business mileage, submitting your completed P87 claim to HMRC and record-keeping that forms the foundation of a successful claim.

How do to choose a mileage tax relief claiming method

Once you’ve confirmed your temporary workplace eligibility, you’ll need to decide which method to use for calculating your mileage tax relief.

HMRC offers two main approaches, each with distinct advantages depending on your circumstances.

Flat rate (Approved Mileage Allowance Payments)

The flat rate method, often called Approved Mileage Allowance Payments (AMAPs), is typically the simplest option and most common.

Under this system, you claim a fixed amount per business mile travelled regardless of your actual vehicle expenses.

The current HMRC-approved mileage rates are:

• Cars and vans: 45p per mile for the first 10,000 business miles, then 25p per mile thereafter.
• Motorcycles: 24p per mile (regardless of total mileage).
• Bicycles: 20p per mile (regardless of total mileage).
• If you transport colleagues during business journeys, you can claim an additional 5p per mile for each passenger.

The flat rate is designed to cover all vehicle running costs including fuel, insurance, repairs, servicing, and depreciation.

Actual cost method for claiming mileage

In contrast to using approved mileage allowance payments, the actual cost method involves calculating the precise expenses incurred while using your vehicle for business.

This approach requires detailed record-keeping of all vehicle-related costs including fuel, insurance, repairs, maintenance, and servicing.

To calculate your claim:

• Record all vehicle expenses for the year.
• Determine what percentage of your total mileage was for business purposes.
• Apply this percentage to your total vehicle costs.

For example, if your annual vehicle expenses total £2,500 and half your mileage was for business, you could claim £1,250. 

Mileage claim type considerations

Generally, the flat rate method benefits those with:

• Lower annual mileage.
• Fuel-efficient or electric vehicles.
• Minimal maintenance costs.
• Preference for simpler record-keeping.This method requires minimal record-keeping in comparison – you simply need to track your business mileage accurately.

Whereas the actual cost method may provide greater relief if you have:

• A vehicle with high running costs.
• Significant repair bills during the tax year.
• Higher than average fuel consumption.
• Time and ability to maintain detailed records.

Where to enter mileage on your P87 form

On the P87 form at section 5 you can enter your mileage details in the dedicated sections for cars or vans, motorcycles, or cycles making sure that box 5.6 is filled in if you’ve completed box 5.3 or 5.5.

You must also complete the ‘mileage allowance relief’ part to detail any non taxable mileage reimbursement from your employer, ensuring boxes 5.11, 5.12 and 5.13 are completed if you have entered figures in box 5.6, 5.8 or 5.10.

If you incur expenses directly connected to a business journey you should include them separately in the ‘Other expenses’ section of your P87.

Common examples of other expenses are road, bridge or tunnel tolls, car parking fees and congestion charges.

You can find a P87 form online here via .GOV.

When to submit your P87 mileage claim to HMRC

HMRC can only accept a P87 claim for mileage after the tax year you are claiming for has actually ended.

A tax year ends on the 5 April each year (starting on April 6) so you will need to wait until after this point to make a claim for a current tax year.

Claims for mileage tax relief must be submitted within four years of the end of the tax year in which the travel occurred.

Taxpayers employed through PAYE are given a timescale of four tax years to claim back their mileage on  P87.

Always include copies of your mileage logs with your claim. These must detail the reason, start postcode, and end postcode for every journey.

If claiming for multiple employments, you must provide separate mileage logs for each job with your P87.

What if your employer gives you a mileage allowance payment?

Many employers reimburse employees for business mileage, but this doesn’t automatically disqualify you from claiming tax relief.

The key factor is the reimbursement rate compared to HMRC’s approved mileage allowance payments (AMAPs).

To calculate your entitlement:

1. Multiply your business miles by HMRC’s approved rate(s).
2. Subtract what your employer has already paid you.
3. Claim tax relief on the remaining amount.

IMPORTANT:

If you are paid a mileage allowance by your employer which is taxed along with your salary you are entitled to use the full AMAP rates.

Our mileage tax relief calculator can help you work out the value of your claim by using the AMAP rates and your total allowable mileage.

What to attach to your P87 mileage claim

Proper record-keeping forms the backbone of any successful mileage tax relief claim.

HMRC scrutinises mileage claims closely, so maintaining detailed and accurate records is non-negotiable if you want your claim approved.

An HMRC-compliant mileage log must contain specific details for each business journey:

• Date of travel. Ensure your log is organised chronologically. A disorganised or incomplete record may result in HMRC rejecting your claim.
• Purpose of the journey (must be business-related).
• Start and end addresses, including postcodes.
• Total miles travelled for each trip.
• Odometer readings (recommended though not always mandatory).
• When submitting your claim, you’ll need to provide evidence of both your business mileage and the amount your employer has already reimbursed you, typically through payslips or a formal confirmation letter.
• HMRC expect a letter from your employer if your employer did not pay you any mileage payments.

Manually tracking business miles can be tedious which is where a mileage tracking app might be useful.

Dedicated mileage tracking apps can simplify the process and offer automatic tracking features that detect when you’re driving and log journeys without manual input.

What does HMRC class as business mileage?

Understanding which journeys qualify for mileage tax relief is straightforward once you know the rules.

Essentially, the trip must be solely for business purposes and to a temporary workplace as per HMRC’s employee travel guidelines.

If you are travelling to a temporary workplace for a period of time it is typically expected that the place of work will stop being classed as ‘temporary’ after a 24 month period.

The crucial distinction is that ordinary commuting (travelling between your home and permanent workplace) does not qualify as business mileage.

Eligible business journeys can include:

• Travel between your permanent workplace and a temporary location (such as visiting clients or suppliers).
• Journeys between multiple temporary workplaces.
• Travel between two workplaces within the same employment.
• Travel from home to another workplace when your home is designated as your permanent workplace due to job requirements.

When you cannot claim mileage relief

There are a number of circumstances where you cannot claim mileage tax relief:

• For ordinary commuting between your home and permanent workplace.
• For personal journeys that lack a clear business purpose.
• When your employer has already reimbursed you at or above the HMRC approved rates.
• If your employer pays you mileage allowance payments (MAPs) that equal or exceed the HMRC approved amount.

If your claim goes over a value of £2,500

When your mileage claim exceeds the amount of £2,500 within a given tax year, it is important to note that HMRC requires you to fill out a self assessment tax return rather than using a P87 form.

To initiate this process, you can easily create a self assessment record online by completing an SA1 form.

This action will grant you access to the specific tax return that you need to complete. Within the tax return, there is an employment section (SA102), where you should accurately enter your mileage claim figure.