After lots of Tricks, it's time for some Treats!
Here are some tax free treats you could take from your company, with the maximum tax free amounts for a two person shareholder-director company shown in brackets.
- Salary (£25k pa)
- Trivial Benefits (£600 pa)
- Annual Parties (£600 pa)
- Cycle To Work Scheme (Credit License Limit: £2k)
- Private Health Checks (Annual - £No Limit)
- Eye Tests (Annual - £No Limit)
- Tax Free Dividends (£2k)
- Pensions (£120k pa – With IFA Advice)
- Relevant Life Policies (£Not Excessive)
Please see below for further details. We do hope these prove to be some treats during a time of plenty of tricks.
- Salary - If you have no other income you should each consider using your £12.5k tax free personal allowance.
- Trivial Benefits – These are new and are designed to save HMRC’s time dealing with small items. Each benefit must cost less than £50 Incl VAT otherwise the whole amount is taxable.
- Annual Parties – One of our old favourites. This could be a Halloween party, as well as a Christmas party. Everyone has to be invited and it’s £150 Incl VAT per person plus £150 Incl VAT for a guest. Again, if you spend more than this including on extras such as taxis, the whole amount is taxable.
- Cycle To Work Scheme – Has to be offered to everyone and the bike used more than 50% of the time for commuting or business journeys. The bike is lent to you and you then buy it from the company at a second hand value a few years later.
- Private Health Checks – A little known annual exemption regardless of any other taxable private healthcare arrangements you may have.
- Eye Tests – A more well-known exemption and assumes you need a test because you use a computer monitor, which is most of us!
- Tax Free Dividends – Whatever other income you earn, everyone gets £1k of dividends tax free. If you have any of your £12.5k tax free personal allowance available, that's also available for a tax free dividend.
- Pensions – These need to be Employer Contributions and usually the limit is £60k each but take care on the detail and take IFA advice. The limit might be higher or lower in certain situations.
- Relevant Life Policies – A death in service policy where neither the premiums paid by the company or the benefits paid out are taxed on you or your beneficiaries. Again, IFA advice is recommended.