With a tax code list in excess of 22,000 pages, you can forgive yourself for not knowing every single tax deduction!
However, knowing them is very much our business! So here’s our ‘insider info” into some of the lesser-known gems available to employers, which are generally used by limited companies.
These benefits are generally tax deductible and have no negative consequences on the employee. Which, of course, could be you as a director…
1. ‘Welfare counselling’
This type of counselling can be a tax-free benefit, providing that (amongst other conditions), it is available to all employees, and does not include medical treatment, advice on finance, legal, leisure or tax (unless debt counselling).
HMRC’s guidance states the intended subjects of the counselling would include:
- Stress
- Problems at work
- Debt problems
- Alcohol and other drug dependency
- Career concerns
- Bereavement
- Equal opportunities
- Ill-health
- Sexual abuse
- Harassment and bullying
- Conduct and discipline
- Personal relationship difficulties
So if you or your team needs some help, it’s worth considering this relief.
2. Health Screening
Another relief tucked away in the manuals is an amount available for health screening. You are allowed a maximum of one health-screening assessment and one medical check-up in any year. Like the welfare counselling, this health screening offer has to be available to all employees.
3. The first £500 per year on Pensions Advice
In our world, pension planning is a hot topic, as from a tax point of view, there are some interesting benefits and positive interactions that can reduce tax bills.
As pensions are strictly regulated, some of the advice you might need is regulated advice. So, you may need to pay to consult a financial advisor.
“All financial advisers in the UK (are) regulated by the Financial Conduct Authority (FCA). This means there are rules they must follow when dealing with you. You can check if the adviser is on the Financial Services Register.”
Good news, then, that some tax relief is available! For this relief to be available, the offer has to be available to all employees, or all employees in a similar situation, such as those nearing retirement.
4. Late Night Taxis
When your limited company pays for an employee (this could be you) for a journey from work to home, this is normally a taxable benefit. (Boo…)
However, if you satisfy the ‘late night’ conditions, the company can pay your fare without a negative tax consequence. (Hoorah!)
This can be a useful relief if you or your team are working late. The conditions are:
- The employee is needed to work later than usual, and until at least 9pm.
- Such late-night working occurs irregularly.
- By the time the employee stops work, either public transport has stopped, or it would not be reasonable to expect the employee to use it.
- The transport provided is by taxi or equivalent road transport.
- You do not claim this more than 60 times per year.
5. Trivial Benefits
These types of tax-free benefits can be used for the company to buy small gifts for you or the team. For more details, see our recent blog on the benefits and uses of trivial benefits here.
Summary
Whilst on their own these benefits may seem small, if you make the most of all of these benefits, they can really add up to a decent saving over a year.
If you have paid out any expenditure personally, you will have likely paid corporation tax and some form of income tax on the money before using it. With tax-free benefits like the above, not only do you likely receive tax relief in the company, they are also income tax free.
In almost all cases, it’s best practice for the employer (the company) to arrange and pay for the services direct.
Want to make the most of tax benefits?
As with all things ‘tax’, there are very specific conditions and definitions that need to be met in order to fit these criteria. Make sure to check with your accountant. If you haven’t got an accountant. or you’re not confident your current accountant is quite on top of this, we’d love to have a chat on how we can help.