Reply to: Trivial Benefit: any rule to prevent *any* small expense upto £50 being tax-exempt?

[Maslins]

I would like to think in this situation my handy accountant might advise me to put the additional 1p on my directors loan account rather than treat as a personal expense when compiling my end of year accounts

Well, yeah, but if you like to maximise everything then you'd perhaps have independently taken a £10k interest free loan, which would then be a £10,000.01 loan...so you have to pay interest on it (or the unpaid interest would be a taxable benefit in kind).

[Maslins]

I can understand that perspective for sure, that's different to it not sitting right though. Sounded like you thought it was ripping the tax man off and morally that didn't sit well with you :P

Hehe, perhaps my answers are a bit inconsistent...I hadn't particularly considered why it made me uncomfortable until being prodded on here.

[l35kee]

My view, get the big wins, but don't devote much of your time to chasing every penny of tax relief available. Far better things to focus on IMHO.

I can understand that perspective for sure, that's different to it not sitting right though. Sounded like you thought it was ripping the tax man off and morally that didn't sit well with you :P

[pr1]

Plus from a practical perspective, if at any point during the year you spend 1p on something personal and claim it, your company has now paid £300.01 on trivial things for the director, it's above £300, so the whole amount is taxable.

I would like to think in this situation my handy accountant might advise me to put the additional 1p on my directors loan account rather than treat as a personal expense when compiling my end of year accounts

[Maslins]

Not superficially, it actually is to the letter of the law. So as it is completely above board, is it a moral objection?

Unsure if it's a moral one as such. To my mind it's a bit like the staff entertainment £150/head thing. By all means have a nice meal with your significant other, and if it costs £100/head, fine. If however it costs £100/head and you then decide to insist on going to a cocktail bar/whatever afterwards, trying to carefully calculate what drinks you buy to ensure you spend exactly a further £49.99/head...then I just feel it's a bit sad personally. I also feel the same way with director loans, where people borrow a full £10k.

Benefiting from something doesn't necessarily mean trying to get every single penny you can from it.

Plus from a practical perspective, if at any point during the year you spend 1p on something personal and claim it, your company has now paid £300.01 on trivial things for the director, it's above £300, so the whole amount is taxable. Same with the £150/head staff entertaining thing...what if you slightly miscalculate and after tip it ends up at £151. Or the director loan, where you take the full £10k, but one month you take your salary the day before it was technically due...then you've (albeit temporarily) breached the £10k. In reality, you're probably not going to get caught, but the more you're exploiting every penny you can get, to my mind the more likely HMRC are to look carefully.

Everyone's got different views on these things, and some will think I'm pathetic/over cautious/whatever, that's fine. Horses for courses. My view, get the big wins, but don't devote much of your time to chasing every penny of tax relief available. Far better things to focus on IMHO.

[pr1]

Do these accountants have moral issues with withdrawing salary up to the NI limit to the nearest £ and taking dividends to the higher tax limit to the nearest £?

Is taking 6*£50 of trivial benefits not being equally efficient?

[l35kee]

I personally would feel more comfortable with this. Seems a bit more like what a "real company" would do with an "actual employee".

Taking 6 x £50 vouchers, possibly even 6 days on the trot...well, it's small enough it'd never get challenged, and superficially it is to the letter of the law...but it doesn't sit right with me.

Not superficially, it actually is to the letter of the law. So as it is completely above board, is it a moral objection?

[BlueSharp]

I'm not sure how this makes any sense.

It doesn't qualify as a trivial gift as it's a voucher and cash vouchers aren't allowed.

I fail to see how it qualifies as an "annual event" (or three "annual events") either.

A gift card can't be exchanged for cash therefore it is not a cash voucher.

[Smartie]

I personally would feel more comfortable with this. Seems a bit more like what a "real company" would do with an "actual employee".

Taking 6 x £50 vouchers, possibly even 6 days on the trot...well, it's small enough it'd never get challenged, and superficially it is to the letter of the law...but it doesn't sit right with me.

Think it's superficially and actually to the letter of the law.

With the ratcheting up of taxation on us, particularly on dividends and the loss of the flat rate VAT benefit (several thousand pounds per year in total) I'm being more particular about taking advantage of things that I might previously have passed up.

[Smartie]

Oh...so close.

Oh I see, you're confused by the voucher thing -

Example D

Employer D provides each of its employees with a bottle of wine costing £25 at Christmas. However, as an alternative, it provides employees who do not drink alcohol with a £25 gift voucher for a national supermarket chain which they can exchange for an alternative non-alcoholic Christmas gift. Both the bottle of wine and the non-cash gift voucher can be covered by the exemption.

[Smartie]

Oh...so close.

Eh?

[TheCyclingProgrammer]

No I'm fine thanks. 3 times a year birthday, Christmas and another annual event such as Easter as recommended in various places.

I'm not sure how this makes any sense.

It doesn't qualify as a trivial gift as it's a voucher and cash vouchers aren't allowed.

I fail to see how it qualifies as an "annual event" (or three "annual events") either.

[Maslins]

No I'm fine thanks. 3 times a year birthday, Christmas and another annual event such as Easter as recommended in various places.

I personally would feel more comfortable with this. Seems a bit more like what a "real company" would do with an "actual employee".

Taking 6 x £50 vouchers, possibly even 6 days on the trot...well, it's small enough it'd never get challenged, and superficially it is to the letter of the law...but it doesn't sit right with me.

[BlueSharp]

Find another accountant who knows the rules. Maybe look up a few posts if you can't find one anywhere else.

No I'm fine thanks. 3 times a year birthday, Christmas and another annual event such as Easter as recommended in various places.

[WordIsBond]

My accountant recommended £50 voucher 3 times a year.

Find another accountant who knows the rules. Maybe look up a few posts if you can't find one anywhere else.