EIM30055 - Dispensations: conditions to be satisfied

Section 65(1) to (4) ITEPA 2003

The guidance on this page applies for the tax years up to and including 2015 to 2016. For tax years 2016 to 2017 onwards dispensations have been replaced by an exemption for amounts which would otherwise be deductible. See EIM30200 onwards.

In order that a dispensation can be issued:

• a person has to supply the Officer with a statement of the cases and circumstances in which payments of a particular character are made or benefits or facilities of a particular kind are provided and
• HMRC has to be satisfied that no tax will be payable by reference to the payments, benefits or facilities mentioned in the statement.

In practice the Officer should issue a dispensation where all the following conditions are satisfied:

• employees are reimbursed expenses that are deductible within Part 5 ITEPA 2003 (see EIM30057)
• claims to expenses are independently checked and authorised (see EIM30059)
• where possible claims are vouched (see EIM30059)
• The employer has procedures in place to ensure that only qualifying employees receive reimbursement in the form of a scale rate payment (see EIM05200 onwards).
• where advances of expenses are made, the employer has procedures to ensure they are fully accounted for, and any excess repaid by the employee.

For the way a dispensation should be worded see EIM30085.