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What determines the year for trivial benefits?

Trivial benefits to a director/shareholder are restricted to £300 'per year'. What's 'a year'?

Didn't find your answer?

I've had conflicting views from some of my peers. Others are just as confused as I am.

Is the year determined by a) the company's annual accounting date b) the Self-Assessment year for the individual to 05 April or c)the fiscal year ending 31 March?

Anyone come across this before?

Replies (15)

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By andy.partridge
24th Feb 2019 15:07

Have a guess.

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By CTA
24th Feb 2019 15:34

Given that s.323B refers to “the tax year”, I can understand the confusion....!

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ALISK
By atleastisoundknowledgable...
24th Feb 2019 17:19

Claim £300 for the tax year, £300 for the fiscal year and £300 for the accounting year. Covers all bases. Job done.

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By SteveHa
25th Feb 2019 09:05

And here I was going to give the technical answer that it's a period of 365 1/4 days occurring consecutively.

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Replying to SteveHa:
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By Vile Nortin Naipaan
25th Feb 2019 10:56

I think the general definition is a period that ends on the day before the first anniversary of its commencement.

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Replying to SteveHa:
ALISK
By atleastisoundknowledgable...
25th Feb 2019 11:15

SteLacca wrote:

And here I was going to give the technical answer that it's a period of 365 1/4 days occurring consecutively.

So is a leap year not a year?

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Psycho
By Wilson Philips
25th Feb 2019 11:19

Definition of "tax year" is at section 4(4)(3) of ITA 2007

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Replying to Wilson Philips:
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By Vile Nortin Naipaan
25th Feb 2019 11:45

Sadly, the OP is devoid of legislation, and in consequence hasn't yet determined whether a tax year is relevant. It may be a fiscal year that is relevant, which apparently ends on 31 March.

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By sammerchant
26th Feb 2019 11:01

Setting aside the facetious comments, the query was to determine how the period of a year during which the shareholder/director may be given a maximum of £300 in 'trivial benefits' was calculated.

Was the period allowed determined by the company's accounting period, the tax year to 05 April or the fiscal year (remembering that the company gets full tax relief on providing such benefits).

I have since been advised by someone who sought clarification from HMRC : it is the year to 05 April.

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Replying to sammerchant:
Psycho
By Wilson Philips
26th Feb 2019 11:15

I think it is dangerous to seek clarification from HMRC on such matters, since their knowledge has proved to be more than a little suspect. (Although in this case, they are correct.)

The definition of "tax year" is clearly set out in the legislation so I'm not sure why you thought that clarification from HMRC (or anyone else for that matter) was required in the first place.

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Replying to Wilson Philips:
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By sammerchant
26th Feb 2019 11:26

Because it crossed my mind that a company's accounting period could easily straddle two 'tax years'. Hypothetically, each director/shareholder could have £600 in such benefits, all allowed for tax in the same AP of the company. I thought that might not be permitted.

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Replying to sammerchant:
Psycho
By Wilson Philips
26th Feb 2019 11:42

No problem with £600 each in the same AP. It all depends on timing.

A director could, hypothetically, have a salary of £22k in a single AP and pay no income tax, with the £22k being fully allowed for CT.

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By Matrix
26th Feb 2019 11:44

Yes you could have that situation, a contractor client was no longer able to claim travel after last Feb but he still expensed it to the company until about May until £600 of trivial benefits used up across both tax years.

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Replying to sammerchant:
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By Tax Dragon
26th Feb 2019 20:49

sammerchant wrote:

Hypothetically, each director/shareholder could have £600 in such benefits, all allowed for tax in the same AP of the company. I thought that might not be permitted.

The £300 isn't a CT allowance. Indeed, it's nothing to do with CT. So I think some of what you have taken as facetiousness was probably no more than bemusement or incomprehension.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
26th Feb 2019 21:07

I believe that what the querist was getting at was the fact that a company could provide benefits worth £600 to a director over an accounting period and get a full CT deduction for the cost, with the director paying no tax - despite the annual limit being only £300. As has been pointed out, this is a valid scenario, if somewhat hypothetical.

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