EIM30081 - Dispensations: relationship with £8,500 threshold

Section 217 ITEPA 2003

Expenses payments and benefits covered by a dispensation do not count as earnings in deciding if an employee is earning £8,500 or more. Therefore a dispensation should not be given if it would result in the employee's earnings being less than £8,500, when they are £8,500 or more with expenses included.

However, this point is only important in practice in those cases where a benefit in kind (for example, a company car) would not be chargeable as a result of giving a dispensation. A dispensation should not therefore be automatically refused for a particular employee solely because its effect would be to make his total earnings for tax purposes less than £8,500. Inspectors should exercise their discretion. In most companies all the employees with company cars etc will be within the benefits code (see EIM20007) and enquiries should be limited to cases where there may be tax at risk.