Trivial benefits £50

lonibra

Hi, I am the sole director of a small trading co.

 I attended a virtual small business forum yesterday and one of the attendees told me that my company could spend up to £300 a year at no more than £50 a pop for things like massages, cinema tickets, etc for me under the trivial benefits exemption with these costs being tax deductible and not counting as benefits in kind? I didn't want to come across as stupid so didn't probe!

 Is that generally correct or might he have missed something important out of what he said? Thanks for any thoughts.

Dazed_and_C0nfused

https://www.gov.uk/expenses-and-benefits-trivial-benefits

lonibra

Thanks for the link. Looks like it's only for employees  

[Deleted User]

lonibra said:

Thanks for the link. Looks like it's only for employees  

Are you a director of ‘your’ close company and, thus, an employee ? If so,

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.

DoctorStrange

You can indeed usually take 6 <£50 benefits each year, but bear in mind that these are not deductible against Corp Tax.

The benefit to you though is that you can avoid income tax and NIC so a small saving,  but still worthwhile 

lonibra

Thanks @DoctorStrange Are you sure they're not tax deductible for the company? That's not what it says on this accountant website.

I might have misunderstood so would be grateful if you point me to the relevant guidance which indicates that it's not tax deductible for the company. Thanks.

Jeremy535897

There is no special provision I can see regarding the deductibility or otherwise for corporation tax or income tax of the cost of trivial benefits, whether provided to directors of close companies or otherwise, so the cost has, like any other expense, to be incurred wholly and exclusively for the purposes of the trade.

DoctorStrange

lonibra said:

Thanks @DoctorStrange Are you sure they're not tax deductible for the company? That's not what it says on this accountant website.

I might have misunderstood so would be grateful if you point me to the relevant guidance which indicates that it's not tax deductible for the company. Thanks.

That does look misleading to be fair.

My accountant has confirmed to me that they're treated the same as entertainment costs i.e. not valid for Corp Tax relief but no additional NIC/IT for the recipient 

Jeremy535897

Entertaining staff is not disallowed for corporation tax if kept within the rules.

lonibra

DoctorStrange said:

lonibra said:

Thanks @DoctorStrange Are you sure they're not tax deductible for the company? That's not what it says on this accountant website.

I might have misunderstood so would be grateful if you point me to the relevant guidance which indicates that it's not tax deductible for the company. Thanks.

That does look misleading to be fair.

My accountant has confirmed to me that they're treated the same as entertainment costs i.e. not valid for Corp Tax relief but no additional NIC/IT for the recipient 

Either your accountant is wrong or these two accountants are wrong. Both the links below clearly say that trivial benefits are tax deductible for CT.
https://www.accountingweb.co.uk/tax/business-tax/trivial-benefits-far-from-trivial

https://www.mytipsandadvice.co.uk/2019-02/trivial-benefits-the-vat-and-ct-consequences-UKTATXAR_EU19100501

[Deleted User]

lonibra said:

DoctorStrange said:

lonibra said:

Thanks @DoctorStrange Are you sure they're not tax deductible for the company? That's not what it says on this accountant website.

I might have misunderstood so would be grateful if you point me to the relevant guidance which indicates that it's not tax deductible for the company. Thanks.

That does look misleading to be fair.

My accountant has confirmed to me that they're treated the same as entertainment costs i.e. not valid for Corp Tax relief but no additional NIC/IT for the recipient 

Either your accountant is wrong or these two accountants are wrong. Both the links below clearly say that trivial benefits are tax deductible for CT.
https://www.accountingweb.co.uk/tax/business-tax/trivial-benefits-far-from-trivial

https://www.mytipsandadvice.co.uk/2019-02/trivial-benefits-the-vat-and-ct-consequences-UKTATXAR_EU19100501

My view has not changed since I posted to ask if you were a director. I have never experienced trivial expenses to be disallowable so long as there is adherence to the rules and limits.