March 2nd, 2020

Trivial benefits – £300 worth of benefits per year from your company tax-free

HMRC have accepted in previous years that some benefits were so trivial that they would not be taxable under certain circumstances.  However, you were required to call the Employer line to ask if this treatment could be applied.

From 6 April 2016 this has changed and new legislation has been brought in which exempts income tax on trivial benefits to an employee or member of the employee’s family under the conditions below:

What I mean by ‘trivial benefits’ is basically anything the company provides you with that costs less than £50.  So, I’m thinking books, wine, theatre ticket, gift cards.

The main motivation behind the introduction of the statutory exemption is simplification and the provision of certainty and transparency for employers along with reducing the administrative cost to HMRC!  However, the law makers also recognised that owners of small limited companies may abuse these rules so a cap of £300 per director has been imposed (there is no limit for normal employees).

With the new tax burden that the introduction of the new dividend tax has imposed on directors of owner-managed businesses, this is a nice little way to get a little bit out of the company without paying additional tax – and every little bit helps!  If your spouse is an employee and director of the company then that’s £600 per year for your household.

There are some pitfalls to look out for:

So, get creating a new account code in your software to keep track of trivial benefits and make sure you get your £300 worth out for 19/20!

Our Newsletter

Enter your email address to subscribe to our mailing list.
  • This field is for validation purposes and should be left unchanged.

Share this post

Filed under

Business advice Limited Companies Uncategorised

by
Director

Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

Give a Goat

Give us a referral and we will donate a goat to a family in Africa

Find out more

Our Newsletter

Enter your email address to subscribe to our mailing list.
  • This field is for validation purposes and should be left unchanged.