2. BENEFITS AND EXPENSES

Benefits.  You’ll probably want your company to provide you with as many benefits-in-kind as possible (provided your personal income tax liability is not so large that it would be cheaper for you to purchase the item in question yourself).  There can be advantages in a whole host of goods and services being provided by your company.  Yes, there will be an income tax charge on you to cover the private element of the benefit, but this is often less than the real market value of having the benefit.

Example:   A higher rate tax paying director wants to purchase goods costing £900.  He would need £1,552 of gross salary, whereas he would be charged income tax on £900 (tax = £360) if the company provided the item.

Care needs to be taken with this philosophy and a cautious approach would be needed for the company to concentrate on first buying those goods which are connected with its trade and which you would have had to purchase personally if the company did not do so.

Expenses.  You’ll want your company to meet the cost of all expenses which have a business connection or relationship, no matter how remote that connection might be.  Although you can claim tax relief under the general rule for those expenses that are “wholly, exclusively and necessarily” incurred in the performance of your duties, this is notoriously restrict terminology.  From a tax avoidance point of view it’s generally sensible to arrange that the company meets all expenses (directly or by reimbursement) which would not have been incurred but for the existence of the duties in question.