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Date of publication:  April 2017

From 6 April 2016 all dispensations cease to exist and have been replaced with statutory exemptions for specific payments. Almost all expenses or benefits that would have been covered by a dispensation will be within an exemption and will not need to be reported on a P11D.

Items that are commonly covered by the exemption are:

  • Travel, including subsistence costs associated with business travel and travel to a temporary workplace
  • Accommodation linked only to business travel
  • Detached duty relief (see below for more information).
  • Fuel for business mileage in a company car
  • Hire cars and related fuel costs if used for business purposes
  • Business entertainment expenses
  • Credit cards used for business and in the business’ name
  • Fees and subscriptions paid to professional bodies if they are approved by HMRC
  • Mobile phones in the company’s name (see flow chart)
  • Business line rental at employees home
  • Uniform and tools for work
  • Sundry business expenses, such as office supplies and stationery
  • Trivial benefits (see below for more information)

The exemption does not apply to expenses or benefits that are paid or provided under a salary sacrifice.
You do not need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses. If you pay above HMRC’s benchmark rates please let us know. The following link sets out agreed rates of reimbursement and contains other useful information: https://www.gov.uk/expenses-and-benefits-a-to-z

Detached duty relief, where the expected period of secondment is less than 24 months, is covered by the statutory exemption as there is no liability to income taxes. As soon as this expectation changes to over 24 months the whole reimbursed expense amount becomes taxable.

Trivial benefits are statutory exemptions if the following conditions are satisfied:

  • Cost of providing the benefit does not exceed £50 per employee (for OMB’s over £300 in total per tax year).
  • Benefit is not cash or a cash voucher
  • The employee is not entitled to the benefit as part of any contractual obligation
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties.

Mobile phones

Please let us know if there are any reimbursed home land line rentals and internet and we can discuss this further.

If you have any queries regarding statutory exemptions, please email me or P11D@ouryclark.com.

TAX 14 Disclaimer: This note does not contain a full statement of the law and it does not constitute legal advice. Please seek legal advice if you have any questions about the information set out above.

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