Benefits that don’t have to be reported to HMRC

There is no requirement to report certain routine expenses to HMRC. The types of expenses and benefits covered are referred to as exemptions and have replaced dispensations which no longer apply.

The business expenses and benefits that do not need to be reported (since April 2016) include: reimbursed costs to employees covering business travel, phone bills, business entertainment expenses and uniforms and tools for work. As an alternative to reimbursing the employee for actual costs incurred, HMRC’s benchmark rates or a special bespoke rate may be used. Employers only need apply for an exemption if they want to use a bespoke rate which needs to be approved by HMRC. Employers that agreed dispensations using bespoke rates prior to 6 April 2016 can continue using the bespoke rates for up to 5 years from the date they were agreed.

Employers must also ensure that they have a checking system in place to ensure that employees are making valid expenses claims. This requirement is usually satisfied by asking employees to submit or retain receipts as evidence of a valid expense claim. HMRC is clear that employees aren’t allowed to check their own expenses and that someone else within the company must be responsible to ensure a claim is legitimate.

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