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P11D Approval Notices

All P11D dispensations became obsolete on 6th April 2016. They have been replaced by an automatic statutory exemption for paid and reimbursed expenses. The main condition attached to this new statutory exemption is that employers must have a system in place for checking that payments to employees are only made on occasions where the employee would be entitled to a deduction.

Certain expenses payments are exempted from tax, e.g. mileage payments up to the Approved Mileage rates are exempted as well as a new set of Benchmark subsistence rates.

Employers who have previously agreed bespoke rates with HMRC must apply for Approval Notices after conducting a valid sampling exercise if they wish to continue to pay these rates tax free.

Unlike the old dispensation regime, Approval Notices cannot apply retrospectively under any circumstances. Failure to do so, will result in bespoke rate expenses payments becoming taxable in the period from 6th April 2016 until a new Approval Notice is granted. There is also a 5 year time limit after which an Approval Notice will have to be re-applied for, by conducting a fresh sampling exercise.

Our consultants can assist you in conducting the required sampling exercises and making the necessary applications for Approval Notices to pay bespoke rates. Please get in touch with us below if this service is of interest to you.

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