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Expenses and benefits in kind: a guide for tax and NICs: how to operate the rules: dispensation  

How to cut down on your paperwork

You may be able to cut down on your paperwork by asking us for a dispensation. A dispensation is a notice, issued by an Inspector, which relieves you from reporting details of expenses and benefits on forms P11D or P9D.

You can ask for a dispensation for expenses payments you make, or benefits you provide, that would attract a full tax deduction in the hands of the employee. Examples include payments to meet the cost of business travel, or benefits provided wholly for work purposes.

You may also use a dispensation for NICs purposes. We accept that:

  • expenses payments covered by the dispensation are not earnings for Class 1 NICs purposes and
  • benefits mentioned in it are not liable for Class 1A NICs.

A dispensation also helps your employees. They do not have to include details of the expenses and benefits covered by the dispensation in their tax returns. Nor are the expenses and benefits included in either their tax assessments or PAYE codes.

The quick guide to whether tax and NICs are due tells you which expenses and benefits can be covered by a dispensation.

Guidance P11DX - How to cut down on your paperwork: dispensations (PDF 35K) gives further information and includes an application form. You can find detailed guidance at EIM30050 onwards.

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