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Many self-employed individuals take the step of formally incorporating their company and becoming a limited company, a separate entity in the eyes of the law. Even if you are the only person working there, you can still form a limited company. This puts you in the role of director of the company, as well as any other roles you may be required to perform. However, these extra roles do come with a few unexpected perks, as you are still considered an employee of the business.

 

The trivial benefits exemption rules that were put into place on 6 April 2016 have some interesting consequences, including a great deal of flexibility on claimable expenses. As director of a limited company, you are entitled to claim up to £300 of trivial expenses per tax year, given that the expenses meet the following specific criteria:

 

-     the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person)

-     the benefit is not cash or a cash voucher

-     the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements)

-     the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

In other words, as director of your company you could purchase six £50 bottles of wine on separate occasions for yourself and claim it as a trivial expense, as long as you do it for a reason that has nothing to do with performance or contractual obligation. If you're not a wine-drinker, you can still make use of the exemption on whatever you want, as long as it meets the requirements above.

 

If you run multiple companies in the role of director, you can claim this £300 worth of expenses for each company that you run as director! You can also provide these benefits to members of your household such as a spouse or children, providing each item is still below £50.

 

To make sure that you don't accidentally get into trouble with HMRC at filing time, it's probably best to have your reputable accountant review the expenses before claiming them. The loophole may be closed by future legislation, so double-check before you spend that £300 on wine!