P11D Dispensations

A P11D dispensation is a notice from HMRC that removes the requirement to report certain expenses to them at the end of the tax year on forms P11D or P9D.  As a result, there is no requirement to pay any tax or national insurance contributions on items covered by a dispensation.

Once granted, dispensations last indefinitely, however HMRC review them regularly and you can expect a review to take place (on average) at least once in any five year period.

The expenses generally covered by a dispensation are:

• Travel, including subsistence costs associated with business travel
• Fuel for company cars
• Hire car costs
• Telephones
• Business entertainment expenses
• Credit cards used for businesses
• Fees and subscriptions

HMRC strictly apply the dispensation from the date they accept the application, although in most cases they will agree to retrospective cover to the beginning of the current tax year.

To obtain the dispensation, you should complete and form P11DX to HMRC.

Contact BDM for further guidance