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Tax Insider Tip: Dispensations For 2015/16

20th Jan 2016
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For 2015/16 you can save a considerable amount of time by applying to HMRC for a dispensation for certain business expenses reimbursed to employees by the company.

Dispensations are available for 2015/16. From 2016/17 the dispensation regime is replaced by a statutory exemption for qualifying reimbursed expenses.

Having a dispensation in place for 2015/16 frees the employer from having to report certain expenses to HMRC on the employee’s P11D. A dispensation can be granted for those expenses in respect of which a corresponding tax deduction can be claimed.

A dispensation also removes the need for the employee to claim the tax deduction, saving work all round.

This applies to any size of company, from a one-person company to large multi-nationals, although obviously the more employees you have, the more time you will save in not having to complete the sections of the P11D that are no longer relevant once a dispensation has been granted.

Example:
Frank is fed up with the time-consuming job of completing P11Ds for his employees when all he does is reimburse business expenses.

He applies for and is granted a dispensation for the business expenses of his employees for 2015/16.

This means that he no longer has to complete P11Ds for the employees as no benefits are reportable. Therefore it leaves him with more time to get on with running the business.

The dispensation is not needed for 2016/17 as a new statutory exemption is available.

 

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

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