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Tax Questions: ‘Trivial’ Benefits for Directors

Trivial Benefits

As a company director it’s important to keep your personal money and the company’s money completely separate. If you use the company’s funds to pay your personal bills, that is treated as a loan to you for tax purposes.

If you use the company’s debit card to buy personal items, the value of those purchases should be credited to your director’s loan account, but there are exceptions.

You can treat small value items as unsolicited tax-free gifts from the company to you, if the purchase meets all four of the following conditions (of which the third and fourth should be particularly noted):

  1. It costs no more than £50 (VAT-inclusive);
  2. It’s not cash or a cash voucher;
  3. You are not entitled to receive the item as part of any contractual obligation; and
  4. It isn’t provided in recognition of any particular services you perform for the company.

You can only receive up to £300 worth of items as tax-free gifts per tax year, a total which also covers gifts the company makes to your family members.

However, the £300 cap doesn’t have to be spread equally across the tax year. A range of individual items purchased in say December and January totalling £300, would qualify as tax-free, as long as each item cost less than £50 and the cap is not exceeded for the tax year.

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For help with your company tax including calculating trivial benefits, talk to our team.

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