Certain business travel expenses are covered by exemptions (which have replaced dispensations). As a result, you are not required to include these expenses in your end-of-year reports.
Expenses covered by an exemption
You do not have to report certain business expenses and benefits like:
To qualify for an exemption, you must be either:
Paying a flat rate to the employee as part of their earnings - this must be either a benchmark rate or a special (‘bespoke’) rate approved by HMRC
Paying back the employee’s actual costs
You should deduct and pay tax and National Insurance on all other expenses and benefits you give to your employees. Report them to HMRC as normal.
You do not need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses.
You only need to apply for an exemption if you want to pay bespoke rates to your employees.
You’ll have to give HMRC evidence that the rates you’re suggesting are based on your employees’ actual expenses.
If you do not have an exemption, you must report the cost on form P11D. You do not have to deduct or pay any tax or National Insurance.
Reimbursing more than the necessary costs
If you reimburse the employee with more than the necessary costs of their business travel, the extra amount counts as earnings, so:
Add it to your employee’s other earnings
Deduct and pay PAYE tax and Class 1 National Insurance through payroll
If you’ve agreed with HMRC that this will be a scale rate payment, you will not need to report it.