Each tax year employers are required to submit forms P11D in respect of all employees who receive benefits in kind but who also incur expenses on behalf of their employer, such as client entertaining, travel and subsistence costs. These expenses should be reflected on form P11D even if the employee has been fully re-imbursed.
To avoid having to submit details of routine business expense payments on P11D’s; a company can apply to HMRC for a ‘dispensation’. Once a dispensation is received you no longer need to show them on form P11D thus relieving the administrative burden of your company in future years.
In particular HM Revenue and Customs introduced from 6 April 2009 an advisory benchmark scale rate for subsistence payments to employees (including directors). Any payments, which exceed these amounts and are not covered by a dispensation, may be subject to PAYE and NIC.
If you already have a dispensation in place, and this was granted before 6 April 2009 I would suggest that it be reviewed to ensure it is appropriate to your current business needs and the change in legislation mentioned above.
Please note any dispensations applied for now will apply from 6 April 2010 only.
Ann Louise Collins
Chartered Tax Advisor
ABS & Co Accountants