Payroll and P11Ds – Dispensations Versus Exemptions

The deadline for P11Ds this year is 6 July (and the date by which any tax due must be paid is 22nd July) and in this article we look at how the P11D  has changed over the last 3 years or so in the area of dispensations and exemptions

P11D Up to March 2016

Pre-April 2016, payroll departments could leave out certain expenses from the P11D form. providing they had been given dispensation to do so by HMRC. Such dispensations, which would only be approved by HMRC if they were satisfied that the employee in question would have been entitled to full tax relief on the benefit in question, were given because they reduced the administrative burden on HMRC. The arrangement worked well for employers too, as it also made tax reporting a bit easier for them.

Post April 2016 Dispensations Replaced by Exemptions

This change meant that employers no longer needed a dispensation to leave out certain business-based expenses from the P11D form, including business travel and subsistence, business credit cards, trivial benefits and professional fees and subscriptions. They are automatically exempt.

The P11D deadline for 2019 is July 6th

The deadline for submitting your P11Ds in 2019 is 6th July, so it’s very nearly here. It’s important to comply with this deadline because penalties for delayed submission are high, whilst penalties for incorrectly completed forms are even higher:

  • Late submissions: £100 per 50 employees per month
  • Incorrect forms: These are charged as a percentage of the revenue lost to HMRC, which can be up to 100%, depending on whether the error was deliberate, concealed or careless

Is an Expense Exempt or not?

As shown above, most of the exempt expenses are business related and quite clear. However, as with all expenses and benefits, there are grey areas. For example, for expenses such as home to work travel, meal allowances, uniforms and entertaining costs it is not immediately clear which are exempt, and which are not.

Talk to us if you are Uncertain About P11D Exemptions

Given the high penalties in place for late or incorrect P11D forms, it’s important to get the calculations right. If you need help or advice contact us or call us on 0121 422 0550 for an initial chat.

As an outsourced payroll bureau, we can take all the payroll headaches off your desk, meaning you can get on with the business of running your company.

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