It's hard to avoid the reaches of HMRC and taxation when you run a limited company. Even staff benefits – such as medical insurance, accommodation and childcare – are no exception to this.
All must be listed on your company P11D, and this can become quite expensive when placed on top of the taxation of your salary and dividends.
But HMRC cannot touch all of your benefits. If you're a director of a limited company, you have the ability to buy tax-free trivial benefits. These trivial benefits come in the form of gift-card vouchers, which can be bought through the company.
Now, there are some rules to follow:
Each director of a company can be paid up to £300, and this can be paid six times during the tax year (this means you need to buy them at £50 each, between the 6th April - 5th April the next year).
The benefits also cannot be:
- Cash or a cash voucher
- A reward for your performance at work
- Within the terms of your work contract
In practice, this means that shopping mall vouchers are a good bet. Any mall should offer vouchers that can be used in any of its stores. Alternatively, Amazon vouchers are also available to buy.
These vouchers usually have a 1-year time limit, so don't feel the need to spend them all at once!
And what's more – these gift vouchers can be used as expenses to go against your profits during the year. So not only can you afford yourself to a bit of a shopping spree, but you can also use your trivial benefit to reduce your corporation tax liability – saving your company money!
To find out more about this, feel free to contact us today.