1. Trivial Benefits:
Directors are entitled to claim trivial benefits up to £300 per director, per tax year, provided each benefit costs £50 or less. For detailed information, refer to the guidelines outlined by HM Revenue & Customs. An example of a trivial benefit could be purchasing multiple
Amazon gift cards, each valued at £50, as separate transactions in the company bank account.
https://www.gov.uk/expenses-and-benefits-trivial-benefits
2. Annual Events:
Companies can host annual events such as Christmas parties, with a maximum cost of £150 per PAYE employee plus guest per year. These expenses are allowable in the company accounts. Ensure a payroll scheme is in place for employees. Refer to GOV.UK for more details on exempt social functions and parties:
Expenses and benefits: social functions and parties: https://www.gov.uk/expenses-benefits-social-functions-parties/whats-exempt
3. Mobile Phone in Company Name:
If a mobile handset is purchased and the calling plan/contract is in the company name, there is no benefit in kind on personal use. However, only one phone and contract should be provided per Director.
4. Working from Home Allowance:
Directors may be eligible for a working-from-home allowance, depending on the number of hours worked on behalf of the business per week.
5. Mileage Allowance:
A mileage allowance of £0.45 per mile (up to 10,000 miles, £0.25 thereafter) can be claimed for travel directly related to business activity on petrol and diesel cars. For property-related business activities, specific guidelines apply, as outlined by HMRC. PIM2220 – Deductions: main types of expense: travelling expenses – HMRC internal manual – GOV.UK (www.gov.uk)
6. Interest on Director’s Loan Account:
Interest on a Director’s Loan Account in credit balance can be charged at a commercial rate, up to £1,000 for basic rate taxpayers, £500 for higher rate taxpayers, tax-free. Additional interest may be tax-free depending on the individual’s UK income level. Compliance activities via form CT61 are necessary for any interest declared.
7. Electric Car:
For directors with substantial self-managed property portfolios, purchasing or leasing a new electric car through a limited company may be advantageous. Electric cars currently have low benefit-in-kind (P11D) rates and minimal personal tax implications. All mileage in a
company-owned electric vehicle can be reclaimed, and the full cost of the vehicle is fully allowable for corporation tax purposes.
8. Utilising Lower Rate Taxpayers:
Optimising tax efficiency within a company structure involves utilising the disparity between tax rates among shareholders. Implementing the correct company tax structure enables flexibility in voting dividends, benefiting from lower rate taxpayers’ rates.
9. Tax-Free Dividends:
Currently, tax-free dividends up to £500 per annum can be drawn, allowing for the free withdrawal of cash.
