Easing returns of benefits - dispensations
It is that time of year again – P11ds (returns of benefits) are due.
It is too late for last year but why not look now at making life easier next year and apply for a dispensation?
A dispensation is an official notice from HMRC that removes the requirement to report certain expenses and benefits. A dispensation can cover anything that HMRC agrees will not give rise to any further income tax or NICs liability.
Where the only expenses paid to or on behalf of an employee are totally covered by a matching business deduction these payments can normally be covered by a dispensation. This saves everyone time and effort.
The main expenses routinely covered by dispensations are:
- Travel, including subsistence costs associated with business travel
- Business mileage only fuel for company cars
- Hire car costs
- Business entertainment expenses
- Fees and subscriptions.
To apply for a dispensation you need to supply details of expenses and benefit payments to HMRC using an online form, which asks for details on the following:
- The types of employee to be included;
- The types of expenses to be included;
- How expense payments are currently vouched and paid.
Before you make a dispensation application, you should have a formal expenses policy (preferably in writing) so everybody knows exactly what expenses can and cannot be claimed together with a policy for checking and authorising expense payments.
Normally dispensations take effect from the date on which HMRC issues them but HMRC may agree your dispensation can take effect from the beginning of the tax year in which you applied for it – so the earlier the better.
Date: 29th May, 2014
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