Commentary

B9.129 Incorporation—other tax points

Business tax
Business tax | Commentary

B9.129 Incorporation—other tax points

Business tax | Commentary

B9.129 Incorporation—other tax points

Tax exempt benefits in kind

A number of benefits in kind that are available to directors of the company are not subject to income tax. Such benefits include:

  1.  

    •     mobile telephones1 (see E4.779A)

  2.  

    •     certain childcare2 (see E4.759A)

  3.  

    •     mileage allowances for use of a car for business purposes3 (see E4.723A)

  4.  

    •     work-related training4 (see E4.737)

In each case, there are caveats set out in the legislation and conditions which need to be fulfilled. Nevertheless, it is invariably beneficial to consider the availability of the exemptions as, effectively, they may result in additional tax savings whilst the business operates as a company.

The extent of such potential savings will, however, depend upon a comparison of the tax relief for such expenditure available to the company with that claimed before incorporation.

Disallowable expenditure

The most common form of disallowable business expenditure is that incurred on entertaining. The add-back for this in the company's adjusted profits computation will be less costly in tax terms than was the case before incorporation.

Example

Nathan is a management consultant and aspiring politician. He earns about £65,000 pa. His biggest expense is entertaining his clients and contacts. He spends about £6,000 pa

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