Ask the Expert: Do I report UK employee expenses on P11Ds? Ask the Expert: Do I report UK employee expenses on P11Ds?

Ask the Expert: Do I report UK employee expenses on P11Ds?
31 Dec 2014

Q. Someone who works in payroll at another company recently told me that I have to report all of our employee’s expenses (even when they qualify as genuine business expenses) on a P11D form. Is this correct?

The answer to this is another question – does your employer have a dispensation with HMRC and what does it include?

The person you spoke to is correct, according to HMRC guidelines. You need to report all expenses paid on form P11d to the employee by the 6 July each year, sending these forms electronically to HMRC by the same date along with the declaration for P11d (b) by the same date.

There is a way of eliminating this need, which is to apply for a dispensation. A dispensation can remove the need to report routine expenses and benefits that do not attract a liability, such as travel, business entertainment expenses, fuel for eligible business trips etc.

A dispensation can be applied for at any time and normally takes effect from the date it is issued.

Dispensations can only be applied for if you have a process for checking expense claims. This involves someone other than the employee checking the claims to ensure they are legitimate and receipts must be produced and kept. If you have a process flow for checking processes HMRC would be delighted to see them to make sure that they are robust.

Dispensations do not expire, however you should check them regularly to ensure they are up to date and you don’t need to amend them. If you change what you include and don’t notify HMRC you may have to pay back the tax that you owe if HMRC cancels your dispensation.

Jeanette Hibbert.

Q. Someone who works in payroll at another company recently told me that I have to report all of our employee’s expenses (even when they qualify as genuine business expenses) on a P11D form. Is this correct?

The answer to this is another question – does your employer have a dispensation with HMRC and what does it include?

The person you spoke to is correct, according to HMRC guidelines. You need to report all expenses paid on form P11d to the employee by the 6 July each year, sending these forms electronically to HMRC by the same date along with the declaration for P11d (b) by the same date.

There is a way of eliminating this need, which is to apply for a dispensation. A dispensation can remove the need to report routine expenses and benefits that do not attract a liability, such as travel, business entertainment expenses, fuel for eligible business trips etc.

A dispensation can be applied for at any time and normally takes effect from the date it is issued.

Dispensations can only be applied for if you have a process for checking expense claims. This involves someone other than the employee checking the claims to ensure they are legitimate and receipts must be produced and kept. If you have a process flow for checking processes HMRC would be delighted to see them to make sure that they are robust.

Dispensations do not expire, however you should check them regularly to ensure they are up to date and you don’t need to amend them. If you change what you include and don’t notify HMRC you may have to pay back the tax that you owe if HMRC cancels your dispensation.

Jeanette Hibbert.