At the risk of being lambasted for not bothering my lovely accountant with this nonsense, and being too dense to fully comprehend the hieroglyphics on HMRC's site, I thought I'd engage the collective wisdom of CUK. ...
I understand BIK is chargeable on expenses put through the business that are construed as also having a personal benefit e.g.: an ICE company car, and that it is charged at your marginal tax rate i.e.: if you're a lower rate tax payer, you'll pay BIK at the same rate.
Are there certain situations where it's beneficial to put an expense through the ltd co rather than fund it personally and pay the BIK?
The specific example(s) I am considering is that I will likely reach the upper limit of the lower dividend tax this year, and there are two "expenses" which are very much personal but I believe could go via the business:
1). Life insurance - I actually already put this through the business (I assumed this was an allowable expense), and my accountant suggested to leave as-is and simply pay the BIK
2). Gym membership - I attend with my family a gym which costs around £450/month (yes, very extravagant, but it's been brilliant for mental/physical wellbeing).
I suspect the answer is no, but is there any benefit in putting these via the ltd co and accepting the BIK charge vs personally funded? Presumably, there's no corp tax savings and the cash equivalent is added to your dividends so you pay the same amount of tax regardless, but I'm brainstorming how to be as tax efficient as possible - fiscal drag has hit us hard and we have a big mortgage increase later in the year. I don't want to let the tax tail wag the dog, but equally I don't want to pay crazy amounts of tax at the expense of my reserve fund simply to keep pace with our expenses.
I understand BIK is chargeable on expenses put through the business that are construed as also having a personal benefit e.g.: an ICE company car, and that it is charged at your marginal tax rate i.e.: if you're a lower rate tax payer, you'll pay BIK at the same rate.
Are there certain situations where it's beneficial to put an expense through the ltd co rather than fund it personally and pay the BIK?
The specific example(s) I am considering is that I will likely reach the upper limit of the lower dividend tax this year, and there are two "expenses" which are very much personal but I believe could go via the business:
1). Life insurance - I actually already put this through the business (I assumed this was an allowable expense), and my accountant suggested to leave as-is and simply pay the BIK
2). Gym membership - I attend with my family a gym which costs around £450/month (yes, very extravagant, but it's been brilliant for mental/physical wellbeing).
I suspect the answer is no, but is there any benefit in putting these via the ltd co and accepting the BIK charge vs personally funded? Presumably, there's no corp tax savings and the cash equivalent is added to your dividends so you pay the same amount of tax regardless, but I'm brainstorming how to be as tax efficient as possible - fiscal drag has hit us hard and we have a big mortgage increase later in the year. I don't want to let the tax tail wag the dog, but equally I don't want to pay crazy amounts of tax at the expense of my reserve fund simply to keep pace with our expenses.
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