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P11D dispensations

Prior to April 2016, the P11D was for employers to report all expenses and benefits provided to employees, regardless of whether they were taxable or not. A business could apply for a P11D dispensation, so certain business expenses wouldn’t have to be reported and therefore reducing the administration burden.

P11D dispensations were abolished from 6 April 2016 and it became the employer’s responsibility to decide which expenses were tax deductible and so non-reportable, and those that are still reportable to HMRC or taxable through the payroll. Failure to do so may result in the collection of unpaid tax and penalties. If your business did have a dispensation it will no longer apply.

You do not need to report expenses that are now covered by an ‘exemption’ such as business travel, business entertainment and professional subscriptions. You do not need to apply for these exemptions as they apply automatically.

These changes should reduce the compliance burden when completing the P11D. However you should review your previous dispensation, if appropriate, and ensure the expenses are covered by an exemption instead, otherwise they will need to be reported to HMRC on your P11D. The P11D for the 2016/17 tax year is due to be filed by 6 July 2017.

If you have any questions, please contact Michael Burgess on 01782 279615.