£300 Trivial Benefit Allowance

Save £228 of tax and get £300 out your company tax free.

Written by 
James Morgenstern
Updated on
April 30, 2024

Summary: 

What it is: HMRC allows company directors to receive up-to £300 of trivial benefits each year from their business 100% tax free. 

Approx tax saved: This will save you up-to £228 of tax. Actual tax savings will vary depending on your individual circumstances. 

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

Here’s how it works: 

Most benefits given to directors of a company are taxable. This means the Director has to pay Income Tax and the business National Insurance. 

However, when the benefit is small enough it does not have to be reported and is tax exempt. This is what’s known as a trivial benefit. 

HMRC allows company directors to receive up-to £300 of these trivial benefits per year from their business 100% tax free. 

Using this tax tip: 

So how do you take this trivial benefit and get the money out of your company? 

Great question. Firstly, you have to know that 2 rules apply. 

  1. No individual benefit should exceed £50 in value
  2. No benefit must be given as cash. However, vouchers do not count as cash.

Therefore, your business can purchase 6 x £50 vouchers per year and give them to you entirely tax free. The vouchers can be from anywhere you like and you can spend them on whatever you like.

Common examples could include vouchers for Amazon, Selfridges and AirBnB. The business pays for it and you get to spend the vouchers on yourself tax free. 

Just make sure to stick to the £300 total limit and £50 individual limit for each voucher purchased. 

The tax savings: 

In total you will save-up to £228 of tax through using this trivial benefits allowance as detailed below. 

Corporation tax: 
The £300 of trivial benefit allowance is tax deductible. At between 19% to 25% corporation this will save you and saves you up-to £75 (£300 x 25%) per year of corporation tax. 

Personal income tax:
If you are a higher rate tax payer (paying 33.75% income tax on dividends), you would otherwise have to issue a further £453 of dividends to retain £300 post income tax (£453 x 33.75% = £153 of tax). 

By issuing £300 of trivial benefits through your company, you avoid paying this tax, yet retain £300 (of vouchers) to spend on yourself tax free.

How do you claim the trivial benefits allowance?

In Mighty

Mighty makes this incredibly easy to do and will take care of all tax deductions for you. Here's how to do so in 3 simple steps. 

  1. Buy the vouchers and find the transaction in your bank feed
  2. Select the transaction and categorise it as a 'Trivial Benefit' under the paying yourself category
  3. Click 'Approve' and Mighty will take of everything - applying the tax saving for you.

And that's it, you've just saved yourself a bunch of tax 100% legally in a couple of clicks!

If you're not with Mighty:

You should make a note and let your accountant know what the transaction is for. They should then be able to categorise it and apply the tax deduction manually for you.

Content:

1. Summary
2. The Rules
3. Here’s how it works
4. Using This Tax Tip
5. The Savings
6. How To Claim it

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