Earlier this year we highlighted the tax concession afforded by the so-called Trivial Benefit rules.
It is possible to make small tax-free payments to employees, including directors…
Employers and employees don’t have to pay tax on such a benefit if all of the following apply:
- it cost you £50 or less to provide,
- it isn’t cash or a cash voucher,
- it isn’t a reward for their work or performance,
- it isn’t in the terms of their contract.
HMRC describes these payments as a ‘trivial benefit’.
You can’t receive trivial benefits worth more than £300 in a tax year if you are the director of a ‘close’ company. A close company is a limited company that’s run by 5 or fewer shareholders.
Readers who manage a business may want to integrate a formal process into their benefits strategy to take advantage of this opportunity.
Every little helps.
If you would like to discuss this article in more depth, please contact DSC Accountants in Skipton on 01756 691065, Harrogate on 01423 560547 or Leeds on 0113 243 3559.