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27/11/19 08:07

Trivial pursuits…but can you take advantage of tax-free trivial benefits?

Are you operating your business through a limited company? Or, do you work for an employer that is a limited company?

If so, you will be aware that your salary and any dividend from the company are taxable, which is fair enough. And if you receive what’s known as a Benefit in Kind – a company car, fuel for your private use, BUPA or any other Medical policies paid for by your company – these are also treated as Taxable Benefits, and they are taxed on you in the same way as your salary.

Alas, all income seems to be taxable….or is it?

It’s not often that we can advise that there is some income that is tax free, but as the well known advert says, every little helps.

An employer and an employee do not have to pay tax on a benefit if the following apply;

  1. It costs £50 or less.

  2. It isn’t cash or a cash voucher

  3. It is not a performance related reward

  4. It isn’t in the terms of an employment contract.

If this is your personal company, there is one further rule, namely that you can’t receive total trivial benefits worth more than £300 in a tax year.

Still, this does mean that your company can undertake up to six annual trivial benefit expenses, at or under £50, tax free to you as beneficiary and a tax-deductible expense to your company.

That’s enough to stock your wine cellar a few times a year….follow the rules, and enjoy up to £300 of tax free benefits per year!

Contact us for a consultation if you require further explanation.

Norman Elliott FCA

18 Bachelors Walk Lisburn BT28 1XJ

18 English Street Downpatrick BT30 6AB

Trivial pursuits…but can you take advantage of tax-free trivial benefits?

Written by: Norman Elliott FCA
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