The form P11D is used to provide information on expenses payments and benefits to HM Revenue & Customs. This information has to be given to HMRC by law for each employee or director earning more than £8,500 (UPDATE: this threshold has been removed from 6 April 2015), and for each director earning less than that unless they are the director of a charity or non profit making concern.
You don’t need to complete a P11D if there are no expenses payments or benefits for an individual.
If you get a dispensation from HMRC then you no longer have to report expenses and benefits on a P11D – and there is also no need to pay any tax or National Insurance contributions (NICs) on items covered by the dispensation.
So what is a dispensation, and how do you get it?
A dispensation is a notice from HMRC which means you don’t have to report expenses and benefits on form P11D at the end of the year. They usually last indefinitely, though they will be reviewed every few years.
How to apply
There is a specific form which needs to be completed, either online or using the paper equivalent. The form asks about certain expenses:
- Travel, including subsistence
- Fuel for company cars
- Hire car costs
- Business entertainment expenses
- Credit cards used for business
- Fees and subscriptions
You can also provide information on any other business related expenses that you think could be covered by a dispensation – its worth having a look through HMRC’s expenses and benefits A to Z to check which items may be covered.
What you need to do
You must either have an independent system where someone other than the employee checks the expenses – OR if you are the sole director of your company then you must ensure you have receipts to support all the expenditure, and you must be able to demonstrate that the claim relates to expenditure that can be covered by a dispensation.