New rules came in for the 2016/17 tax year which continues into the 2017/18 tax year with regards to trivial benefits for limited companies.

If you and your partner are the only directors and shareholders of a personal service company, this means that each director is allowed up to £300 of trivial benefits per tax year.

Trivial benefits rules

£300 is the total that can be spent per director in a tax year (6th April to 5th April).

There is also a cap on each single benefit being provided of £50.

It is important to make sure that no single purchase is above £50 otherwise the whole amount becomes a taxable benefit in kind.

A trivial benefit cannot be cash or a cash voucher (a voucher which can be exchanged for cash) and it must not be a reward for an employee / directors work or be a part of the terms of their contract.

What counts as a trivial benefit?

Frustratingly (or perhaps typically!) there is not a simple description from HMRC as to what constitutes a trivial benefit.

HMRC will assess the item and apply judgement to it to see if the expense is in reality part of the employee’s remuneration (pay) or if it is genuinely a trivial benefit and meets the criteria discussed earlier in the article.

Some examples of allowable trivial benefits include:

• Bottles of wine
• A Christmas Turkey
• Flowers

If you are unsure if any item qualifies as a trivial benefit you can call HMRC on the employers helpline to confirm.