P11D Dispensations

Last month we reported that forms P11D which report details of employees’ benefits in kind and expenses have to be with HMRC by 6 July. Some of you will no doubt be trying to collate the necessary information to prepare these forms which is a time consuming process.

Employers who obtain a dispensation from HMRC only generally need to report taxable benefits without having to report details of expense payments. These expense payments such as payments for travel (taxis, train fares and parking) and subsistence costs (hotel bills and meals) which would normally not result in a taxable benefit as they are ‘incurred in the performance of the duties of employment’. Unfortunately the tax rules state that these payments have to be reported by the employer on forms P11D and then claimed as tax deductible personally by the employee.

HMRC have issued a new form to enable employers’ to apply for a dispensation which is far more detailed than the previous version. A dispensation should only be applied for where your expenses procedures would stand up to close scrutiny and we can help to check if this is the case.

If you already have a dispensation it may be time to review it to check it still accurately reflects your businesses procedures.

Internet Link:

HMRC guidance and form P11DX