Tax changes in the last few years haven’t always been the best news for company directors. I’m thinking of the changes to the dividend tax regime and the flat rate VAT scheme.
However, there is a small glimmer of hope, courtesy of what HMRC calls the ‘Trivial Benefits Exemption’.
As a director of a company, the exemption allows you to receive individual ‘benefits’ of £50 or less totalling a maximum of £300 each year. These benefits can be purchased for members of your household too.
A benefit could include wine, gift vouchers, flowers, jewellery, electronic items or perhaps video games for the kids.
As with all things relating to tax there are rules, but these are pretty simple to follow.
Each benefit must not exceed £50 (including VAT).
The benefit must not be cash or a cash voucher. However, gift vouchers for supermarkets and shops are allowed.
The benefit must not be a contractual obligation or a recognition reward. Benefits should be awarded perhaps because it’s Christmas, a birthday or just because the sun is shining! Basically, any non-work-related reason. If a benefit is provided because you worked late, completed a specific project or have worked hard etc, then this exemption is not allowed.
If a Husband and Wife are both directors of the same company, they can both claim £300 each.
If you are a director of more than one company, £300 of trivial benefits can be received from each company.
Benefits can be provided to members of your household including your spouse and children. The benefits they receive count towards your £300.
As always, please double check with your accountant that this benefit applies to your individual circumstances as other rules may apply.
To read further information from HMRC about this subject, please visit:
The £50 trivial benefits exemption can also be applied to gifts provided to employees. To find out more click here.