Dispensations agreed between the HMRC and IPSA


Please can you provide me with a copy of any dispensations that have at any time been agreed between IPSA and HMRC.

Please could you also provide copies of any correspondence between HMRC and IPSA which refers to the subject of dispensations.


IPSA holds some of the information that you request.  IPSA is responsible for the MPs’ Scheme of Business Costs and Expenses and does not have responsibility for members of the House of Lords.  IPSA was established under the Parliamentary Standards Act 2009 and began operations in May 2010.  It does not therefore hold information relating to the calendar year 2009. 

One of the fundamental principles of the MPs’ Scheme of Business Costs and Expenses is that MPs have the right to be reimbursed for unavoidable costs where they are incurred wholly, exclusively, and necessarily in the performance of their parliamentary functions, but not otherwise.  IPSA applies HMRC rules for the tax treatment of business expenses to the costs and expenses which MPs incur as a result of their parliamentary functions.

MPs’ costs and expenses are treated differently by HMRC depending on the type of expenditure.  Accommodation expenses, for instance, are exempt from tax by virtue of legislation.  The legislation recognises the binary nature of MPs’ working arrangements, which require them both to live and work in two locations.  Other costs, such as MPs’ Staffing expenditure, are covered by a dispensation.  Dispensations ensure that MPs are not required to report expenditure to HMRC which are not subject to tax.

HMRC requires IPSA to report certain types of expenditure on MPs’ P11D forms.  MPs can then apply to HMRC for tax relief or capital allowances, depending on the cost or expense.  HMRC does not provide dispensations for certain expenses, and in a minority of cases MPs, their staff, or IPSA are liable for the tax.

Please find attached annexes numbered 1-33, plus 3a, 3b and 14a [.zip].  These include copies of email correspondence between HMRC and IPSA on the subject of dispensations and copies of dispensations that have been agreed between HMRC and IPSA.

25 June 2012
Exemptions Applied: