Reply to: Trivial benefits anyone?

[Smartie]

It does matter, very much, although not in this particular case. It's important that you understand that. I'll let you work out why, but the hint is in my earlier post.

Dost thou think, because thou art virtuous there shall be no more cakes and ale?

[TheCyclingProgrammer]

Actually I think it's not that hard to get it wrong (or maybe I'm more stupid than I thought). On some (semi/)official forms, when asked my employment status I have in the past specified that I am Employed rather than strictly Self-Employed, assuming - as others clearly do - that I am effectively an employee of my LTD company.

Yours and Mal's posts seem to highlight that this isn't the case at all, but in my mind 'self-employed' always evokes sole traders and people who operate without limited companies. So to ask the stupid question, am I employed or self-employed? I am the sole director and owner of my LTD.

If you are a company director as far as HMRC is concerned (or anything officially related to your tax affairs), you are *not* self-employed.*

Officially your status is Company Director - a company officer - and as far as form filling goes this would normally equate to "employed" if director isn't an option, however in certain circumstances it is relevant whether or not you have an actual employment contract, which is what Mal was getting at.

To confuse things further you may be treated as "self-employed" for non-tax purposes...e.g. on a mortgage application, depending on the lender's criteria. This doesn't make you actually self-employed, it just means you are treated as such.

[*] well you can also be self-employed separately to your company directorship but that's besides the point.

[northernladuk]

That's a slightly different question. The OP is talking about being employed by his limited.

[Willapp]

How do so many people get this so wrong?

Actually I think it's not that hard to get it wrong (or maybe I'm more stupid than I thought). On some (semi/)official forms, when asked my employment status I have in the past specified that I am Employed rather than strictly Self-Employed, assuming - as others clearly do - that I am effectively an employee of my LTD company.

Yours and Mal's posts seem to highlight that this isn't the case at all, but in my mind 'self-employed' always evokes sole traders and people who operate without limited companies. So to ask the stupid question, am I employed or self-employed? I am the sole director and owner of my LTD.

[TheCyclingProgrammer]

My understanding is it can't be something readily converted into cash. Therefore the majority of gift vouchers are fine, as whilst you can use them to buy a variety of things depending upon the shop in question, you typically can't take a gift voucher into a shop and walk out with that amount of cash instead.

I assume HMRC wouldn't try to argue services like this meant they could be converted into cash, as if they did then surely eBay/similar proves everything can be converted into cash.

Thanks, that makes sense.

I had a quick search on the draft guidance above and it does seem to back what you're saying up:

One of the conditions that has to be satisfied before the trivial benefits exemption can apply is that the benefit is not cash or a cash voucher. However, benefits provided in the form of a non-cash gift voucher can be covered by the exemption.

[Maslins]

Couldn't that be considered a cash voucher? I'm not sure how that is defined.

My understanding is it can't be something readily converted into cash. Therefore the majority of gift vouchers are fine, as whilst you can use them to buy a variety of things depending upon the shop in question, you typically can't take a gift voucher into a shop and walk out with that amount of cash instead.

I assume HMRC wouldn't try to argue services like this meant they could be converted into cash, as if they did then surely eBay/similar proves everything can be converted into cash.

[TheCyclingProgrammer]

Here is the draft guidance that was published last year. I cannot find the final guidance however this should still give you a good idea of the sort of thing the trivial benefits exemption was designed to allow for, with examples:

https://www.gov.uk/government/public...draft-guidance

Examples include: taking a group of employees out for a birthday meal where the average cost per head is below the £50 limit, giving employees a gift at Christmas (e.g. a turkey or bottle of wine), other gifts below the limit.

Its worth reading the examples regarding directors and the annual exempt limit carefully to see how it works.

TLDR; YourCo treating you to a bottle of wine for Christmas and your birthday, or paying for the Christmas turkey are perfectly acceptable ways to save a small amount of tax if you're so inclined.

[TheCyclingProgrammer]

Sorry?

They are expenses that probably won't get a receipt, like phone calls or a daily newspaper when away from home. They still have to be business related.

Benefits do not have to have a business purpose from the employee's perspective - gym memberships, private health insurance etc. - none of these are business related.

The business purpose (from the company perspective) is that you are providing a benefit to your employees (including office holders). These are (normally) tax deductible for the company, just the same as any salary is, but normally taxed as a BIK on the employee.

However the point here is that certain trivial benefits can be given without there being a BIK or any need to report them to HMRC. And sensibly, there is an annual cap for company directors to ensure it doesn't get abused. Its not complicated. The rules are very straightforward. IIRC this was a suggestion made by the OTS when they reviewed employee benefits.

[TheCyclingProgrammer]

It can also be, say, Amazon gift cards by the looks of it.

Couldn't that be considered a cash voucher? I'm not sure how that is defined.

[malvolio]

This doesn't seem to matter in any case: "Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year (see EIM21869)."

https://www.gov.uk/government/public...draft-guidance

It does matter, very much, although not in this particular case. It's important that you understand that. I'll let you work out why, but the hint is in my earlier post.

[malvolio]

I think the point of trivial benefits is that they are not wholly and exclusively business related... they are trivial benefits

Sorry?

They are expenses that probably won't get a receipt, like phone calls or a daily newspaper when away from home. They still have to be business related.

[Smartie]

How do so many people get this so wrong?

This doesn't seem to matter in any case: "Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or a member of their family or household) the exemption is capped at a total cost of £300 in the tax year (see EIM21869)."

https://www.gov.uk/government/public...draft-guidance

[WordIsBond]

Wondering if anyone has provided themselves with 'trivial benefits' of <=£50 per time, up to £300 per year in non-cash items without a requirement to report them for tax purposes?

Yes. But I have employees, so it isn't just "myself".

We take everyone (including spouses) out to lunch when any employee or employee spouse has a birthday. We buy everyone who wants one a Christmas turkey. And we pay for flu jabs for everyone who wants it.

[pr1]

... and assuming it's wholly and exclusively business related of course...

HTH.

I think the point of trivial benefits is that they are not wholly and exclusively business related... they are trivial benefits

[northernladuk]

We're an employee of a limited company :-)

How do so many people get this so wrong?