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Tax Free Benefits for Limited Company owners

If you’re a business owner running a Limited Company, you can provide your employees with certain benefits, tax free. These are known as Trivial Benefits.

As the owner and director of the business, you too can receive these benefits. 

You don’t have to pay tax on a benefit for your employee if all of the following apply:

  • it cost you £50 or less to provide

  • it isn’t cash or a cash voucher

  • it isn’t a reward for their work or performance

  • it isn’t in the terms of their contract

You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

Directors of ‘close’ companies

You can’t receive trivial benefits worth more than £300 in a tax year if you’re the director of a ‘close’ company.

A close company is a limited company that’s run by 5 or fewer shareholders.

Examples of Trivial Benefits

  • A gift on an employees birthday

  • A gift card (cannot be redeemable for cash)

  • A meal out

If the benefit is a penny over £50, then the whole benefit becomes taxable. 

There are separate allowances for events such as Christmas Parties so be sure to consider the most appropriate allowance in the circumstances.

If you’d like to find out more about tax free benefits or how you can run your limited company in the most tax efficient way, book in a discovery call using the link on our website.


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