The P11D is used to report employee expenses and benefits paid to them during the tax year and as an employer you need to complete a P11D for each employee who earns more than £8,500.
Currently if your employees don’t receive any benefits and expenses or only receives reimbursed expenses (such as a mileage claim) you can apply for a dispensation. This removes the requirement for certain expenses to be reported in a P11D.
What’s changing?
In line with HMRC’s current trend of simplification some new legislation was introduced to cover the payment of business related expenses.
This is being introduced from the 6th of April 2016 and means that you are no longer required to obtain a dispensation from HMRC to cover the repayment of business related expenses.
However this does not mean you no longer need to fill in P11D’s – if employees receive any benefits (such as a company car) then this still needs to be reported on the P11D form.
What happens up to 6th April 2016
The current system still applies up to the 6th of April 2016 with HMRC still able to issue dispensation notices. Therefore, is you pay expenses lots important to ensure you have a dispensation for this period as the change only comes into force for expenses paid post 6th April 2016.
We suggest that current businesses take a quick look at the dispensations you have in place and internal processes to ensure compliance (such as expenses policies).