On the twelfth day of Christmas, the taxman gave to me…..a lovely blank P11D!
If you have staff who travel and perhaps stay overnight away from their normal place of work on business, then for the short time we have dispensations to apply for, they should be applied for.
Whilst the office of tax simplification (OTS) are seeking to remove dispensations from the tax regime, they are still currently available and prove useful, particularly where you might reimburse more unusual business expenses.
Agreeing a dispensation is especially important where you either haven’t got a dispensation agreed at all or where it is more than five years old and your business reimbursements have broadened, as the business has grown or diversified.
The application form (P11DX) is essentially an unofficial check list of the points for consideration on your expenses systems and as such can be a useful check before the form goes to HMRC.
If you don’t have a dispensation, then all business expenses reimbursed to your staff should be included on their forms P11D, and they are then required to submit a business expenses claim (S336) to ensure they are not taxed on the amounts.
An Inspector friend of mine once told me that the only good P11D is a blank P11D, as the forms can be difficult to complete correctly
I had to agree, as the penalties for incorrect forms can be quite steep. Of course there are also penalties for forms which should have been submitted but haven’t been, so the whole area should be looked at very carefully at the end of each tax year, or before if you have any queries at all!
So where the only P11D entries for certain staff are (or should be!) reimbursed expenses, the way to minimise your administration and protect from penalties would be a dispensation.
The only reason you should lose sleep at Christmas is the thump of Santas sleigh on your roof, (and possibly the cost of an X Box 1), so put this on your list of resolutions for the new (tax) year.
Review your expenses and update or apply for a dispensation, today – whilst you still can.