Dispensation
...not your meal ticket
A dispensation is an agreement a company has with HMRC in respect of relieving the company of it's administration burden at the end of the tax year when completing forms P11D. The dispensation allows the company to process certain expenses without having to record them or file the associated receipts, therefore reducing the amount of administration the company has to do. This also helps to keep the PAYE umbrella fees to a minimum.
What you should be 100% clear on is that the dispensation does not apply to you as an individual, it is purely for the benefit of the company, which is why it is important that you retain receipts for any expenses you may claim for during your term of employment. The only benefit to you is that you do not have to send in certain hard copy receipts to support any expenses you may claim that are covered under the terms of the dispensation. This of course does not absolve you of your obligation to retain the receipts for future auditing purposes.
The dispensation is certainly not a green light for you to claim the defined costs carte blanche. We do NOT use our dispensation as a sales or marketing tool unlike some PAYE umbrella companies and therefore do NOT market or disclose it or its contents in any way shape or form. This is where the problem exists with some PAYE umbrella companies in that they will quite openly advertise or abuse their agreement with HMRC and by doing this are also encouraging individuals to claim the specified amounts irrelevant of whether the expenses were incurred or not.
Any amounts detailed on the dispensation are the limits of which the PAYE umbrella company can process expense claims for without recording them on the annual P11D.
So to summarise, if a PAYE umbrella operator says you can claim expenses under the terms of their dispensation, understand that although you may not be required to send the PAYE umbrella the hard copy receipts you should certainly retain those receipts for auditing purposes.
The simple rule is this, if you didn't incur the expense in the first place, don't claim for it!