A dispensation cuts down on employer’s paperwork as it means you do not have to report benefits and expenses you pay your employees. HMRC are having another attempt to increase the number of dispensations, by offering an online application facility. HMRC say they are committed to granting P11D dispensations whenever they can. This basically requires them to be happy that no income tax charge could arise on the benefits or expenses covered.
One of the requirements is that the employee’s expenses claim to the company is checked independently. HMRC now say that for a one-man company this condition is satisfied if, for example, an accountant reviews all the expenses claims when doing the bookkeeping or the VAT return.