P11D dispensations have been dispensed with
Last year saw an important change to the way tax-deductible business expenses, which are paid to employees, are dealt with.
Until the beginning of the 2016-17 tax year, employers who did not have a dispensation from HM Revenue & Customs (HMRC) were required to report benefits and expenses paid to employees.
Now, these dispensations have been abolished and such expenses are no longer reportable to the revenue.
The move means that businesses that did not have a dispensation in place will no longer have to deal with the considerable administrative burden of completing P11D. However, the quid pro quo for the change is that employers are now required by law to have a system in place for validating expense claims.
Additionally, the new exemption does not apply in circumstances where a reimbursement is in conjunction with a salary sacrifice scheme.
The same raft of changes have also impacted on the procedures for trivial benefits in kind. The changes mean that any benefit that meets the following criteria set out by HM Revenue & Customs is exempt from income tax and national insurance:
- The cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person);
- The benefit is not cash or a cash voucher;
- The employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements); and
- The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).
The rules differ slightly for office holders of the company, family members and members of the household. In these cases the exemption is capped at £300 in total for the tax year.
- National Living Wage to rise in April 2019
- Entrepreneurs’ Relief rules to be tightened
- Research reveals Inheritance Tax hotspots across the UK
- R&D Tax Credit system to be reviewed in light of fraudulent claims
- HM Revenue & Customs to review and rework some 2016-17 self-assessment tax returns following error
- Payee names to be required for bank transfers in effort to combat fraud and errors
- Public pilot of Making Tax Digital for VAT opens
- Autumn Budget 2018
- Budget date 2018 announced, with half the usual notice
- Employment claims from contractors brought within IR35 expected after HMRC settlement
- Just eight per cent of business loan applications successful with one high street bank
- Government backed tax-free savings plan to help savers earn 50p on every £1
- HMRC investigates estate valuations as part of IHT campaign
- Micro businesses bear the brunt of late payments
- HMRC finally launches MTD communications plan and simplified guidance
- Workers miss out on £15.6 million in pay through minimum wage breaches
- CIOT reports increase in R40 refund errors
- Property investments once again hit by new tax rules
- HMRC releases new advisory fuel rates for company car users
- One in ten small businesses are concerned about business failure
- A quick guide to the new penalties for late MTD filing and payments
- Regulator tells banks to stop victim-blaming
- Working 9 to 5? It’s an unusual way to make a living
- Finance Bill shrinks in the parliamentary wash-up as PM announces snap election
- New civil penalty notices are now in effect for residential landlords
- A furnished holiday letting won’t just give your customers much needed relief
- P11D dispensations have been dispensed with
- Online VAT fraud and error costing UK dear
- HMRC issuing hefty fines to eBay and Amazon traders who fail to pay tax
- HMRC goes “nuclear” in pursuit of unpaid taxes
- Could you benefit from Tax-Free Childcare?
- Give your business’ finances a spring clean
- Does Annual Tax on Enveloped Dwellings (ATED) apply to you?
- Businesses are more buoyant, says the Bank of England
- Record number of employers underpaying workers
- Cash basis accounting for landlords
- Trivial in name only – do you know the rules on trivial benefits in kind?
- Warning over unexpected late payment notices in relation to now-liquidated companies
- Small businesses see changes to the VAT Flat Rate Scheme
- Spring Budget 2017
- The Restaurant Show: Preview
- Pub 16
- HMRC enquiries
- The Restaurant Show: What does it have to do with pubs?
- Private investment in pubs
- Summer Budget Statement 2015
- Miller Magic!
- Retail Rate relief scheme
- If you’re an employer, you should read this
- Pensions Auto Enrolment: All employers must read this…