P11d Benefits in Kind: Exemptions

Under the normal HMRC rules regarding Benefits in Kind all cash sum payments to employees should be reported on a P11d form and P11d(b) form. This can cause an administrative burden to a business if they are simply reimbursing their employees for business expenses and in these cases they can use what is known as an Exemption.

What is an Exemption

An exemption covers the reimbursed of actual costs business expenses such as:

  • business travel
  • phone bills
  • business entertainment expenses
  • uniform and tools for work

These expenses do not need to report payments made to employees in this way on a P11d or P11d(b).

How to Apply for an Exemption

Your don’t actually need to apply for an exemption, unless you are reimbursing at different amounts to the actual costs.  Make sure you keep all receipts and expense claim forms as evidence for this as well as any other tax claims you make such as corporation tax relief. You must also have in place an approval process for expenses.

Exemptions Replaced Dispensations

Until the 5 April 2016 a business needed to apply for a special Dispensation to avoid reporting the reimbursement of actual employee business expenses.  However this was replaced by the rules of the Exemption.

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.