Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Employment Income Manual

From
HM Revenue & Customs
Updated
, see all updates

Dispensations: general

Section 65 ITEPA 2003

The guidance on this page applies for the tax years up to and including 2015-16.  For tax years 2016-17 onwards dispensations have been replaced by an exemption for amounts which would otherwise be deductible. See EIM30200 onwards.

If HMRC is satisfied that no tax will be payable on particular expenses payments or benefits of a director or employee within the benefits code (see EIM20007), it can give notice to the person paying or providing them that this is the case.

The notice given is called a dispensation.

When a dispensation is given all the legislation relating to the particular expenses payments and benefits of the director or employee no longer applies.

Therefore a dispensation should only be issued where the department is satisfied no tax will be payable, either because the employee would be entitled to a deduction from the expenses or benefit under Sections 336 to 338 ITEPA 2003 or for some other valid reason.

See EIM30052 for more detail about dispensations.

Guidance on dispensations is also in the Compliance Operational Guidance (COG) manual at COG907080 onwards.