Tax-Free Benefits a Limited Company Can Give Its Director (2026/27)
The expenses guides on this site cover what the company can deduct. This page answers a narrower question that directors ask about their own pocket: which things can the company pay for, or give you, without Income Tax, National Insurance or a P11D? Each item has its own limit and its own trap, and for a director of a small company some of the limits are tighter than for staff.
Written by James Whitfield · Last reviewed 7 November 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
- Trivial benefits of £50 or less are tax-free, but a director of a close company is capped at £300 a tax year.1
- One mobile phone is exempt if the contract is in the company's name, not yours.3
- The company can pay £6 a week (£26 a month) towards working from home with no receipts.5
- Mileage in your own car is tax-free at 55p a mile for the first 10,000 business miles in 2026/27.6
A limited company can give its director several things free of tax and National Insurance: trivial benefits costing £50 or less each (up to £300 a year for a director of a close company), one mobile phone on a company contract, £6 a week towards working from home, business mileage at HMRC's approved rates, one health screening and one medical check-up a year, eye tests for screen work and up to £500 of pensions advice.
Because the cost is normally a deductible staff cost for the company and you pay no tax on it, these are cheaper than taking the same value as a dividend. In our example, £972 of benefits would need £1,344.55 of extra company profit to match as cash for a basic-rate director, and £2,058.28 for a higher-rate director.
- ·Trivial benefit: £50 each, £300 a year (close company)
- ·Homeworking: £6 a week
- ·Mileage: 55p, then 25p over 10,000 miles
- ·Annual party: £150 a head
The exempt list, with the limit that matters
Each item below is exempt from Income Tax and National Insurance and does not go on a P11D, as long as its own conditions are met. If a condition fails, the whole benefit is normally taxable, not just the excess.
| Trivial benefits1Not cash or a cash voucher, not a reward for work, not in your contract. Directors of a close company (5 or fewer shareholders): £300 in total per tax year, including benefits to your family or household. | £50 each |
| Annual party or similar function2Open to staff generally. If the year's functions cost more than £150 a head in total, only the ones that fit within £150 stay exempt. It is not an allowance to spend. | £150 a head |
| One mobile phone3One phone or SIM per employee, with the contract between the company and the supplier. Paying your own bill is taxable. | No limit |
| Working from home5Or £26 a month, without evidence, if you regularly work at home under an agreed arrangement. More needs evidence of the extra household costs. | £6 a week |
| Business mileage in your own car6First 10,000 business miles from 6 April 2026 (45p before), 25p after that. The 25p rate becomes 35p from 6 April 2027 (Budget 2026). | 55p a mile |
| Health screening and check-up4Plus eye tests and glasses needed for screen work, and flu jabs. | One each a year |
| Pensions advice2Advice on your pension arrangements, including general financial and tax issues linked to them. | Up to £500 |
| Employer pension contributions8Not a benefit in kind at all; the company deducts them and you pay no tax or NI, within the £60,000 annual allowance. | Annual allowance |
Trivial benefits: the £300 cap in practice
The trivial benefits exemption is the one directors most often get wrong. Each benefit must cost the company £50 or less, including VAT, and must not be cash, a voucher you can swap for cash, or a reward for your work.1 A £50 restaurant meal on your birthday or a bottle of wine at Christmas fits; a £60 meal does not, and the whole £60 becomes taxable.
For a director of a close company the total is capped at £300 in the tax year, and benefits given to your family or household count towards your cap.2 So a director whose company also buys a £50 gift for their partner has £250 left for themselves that year. Keep a short note of each benefit, its date and cost.
The exemption does not apply where the benefit is part of a salary sacrifice arrangement or is written into your contract.1
Phones, homeworking and mileage: whose name is on the bill
For a phone, the test is the contract. If the company signs the contract with the supplier and provides one phone, there is nothing to report. If the contract is in your name and the company pays it or reimburses you, the payment is earnings.3 Moving the contract into the company's name is often all it takes.
For working from home, the £6 a week is a flat amount the company may pay without receipts.5 Since 6 April 2026 employees can no longer claim working-from-home tax relief from HMRC themselves,9 so for a director working from home the company payment is the route. Equipment the company provides mainly for work, such as a laptop, is also exempt if private use is insignificant.5
For mileage, the company can pay up to the approved amount tax-free: 55p a mile for the first 10,000 business miles in 2026/27 and 25p after that.6 A director driving 12,000 business miles in their own car can be paid £6,000 for 2026/27. From 6 April 2027 the higher-mileage rate rises to 35p, so the same miles would allow £6,200.7 Commuting to a permanent workplace never counts as business mileage.
- Use of home as office calculator — £6 a week or a rent arrangement
- Company car calculator — when the company owns the car instead
Worked example: £972 of benefits against a dividend
A sole director takes a £12,570 salary and pays the rest of the company's profit as dividends. During the year the company also provides:
| Six trivial benefits at £50 (birthday meal, gifts at Christmas and other occasions) | £300 |
| Working from home allowance, £6 a week for 52 weeks | £312 |
| Company mobile phone contract (assumed £30 a month) | £360 |
| Value received tax-free | £972 |
With company profit of £40,000, all of the director's dividends are in the basic-rate band. To give the director the same £972 as extra cash, the company would need £1,344.55 more profit: Corporation Tax at 19% comes off first, then 10.75% dividend tax. Provided as benefits, the £972 is deducted from profit and saves £184.68 of Corporation Tax.
With company profit of £100,000, the extra dividends would be taxed at 35.75% and the company is in the marginal relief band, so the cash equivalent needs £2,058.28 of profit, and the benefits save £257.58 of Corporation Tax. The higher your dividend rate, the more each exempt benefit is worth.
Common traps
- Cash and gift cards that can be exchanged for cash never qualify as trivial benefits, even at £10.
- A benefit described as a thank-you for a good year is a reward for work, so the trivial benefits exemption does not apply.
- The £150 party figure is a limit, not an allowance: a £160-a-head event is taxable in full.
- A second phone, or a phone for your partner, is taxable even when the company holds the contract.
- Private medical insurance is not on the exempt list; it is a taxable benefit reported on a P11D.
- Exempt benefits still have to be genuine company spending, recorded in the company's books with the receipts.
Frequently asked questions
Can a sole director use the trivial benefits exemption?+
Yes. The exemption applies to directors, but a director of a close company (run by 5 or fewer shareholders) is limited to £300 of trivial benefits in a tax year, including any given to their family or household. Each benefit must still cost £50 or less.
Can my company pay my mobile phone bill?+
Tax-free only if the contract is between the company and the phone supplier and it is your one company phone. If the contract is in your name, the company paying it counts as earnings.
How much can my company pay me for working from home?+
£6 a week, or £26 a month, without evidence, if you regularly work from home under an agreed arrangement. Paying more is possible with evidence of the extra household costs.
What mileage rate can my company pay me in 2026/27?+
Up to 55p a mile for the first 10,000 business miles and 25p after that, tax-free. From 6 April 2027 the rate above 10,000 miles rises to 35p.
Do tax-free benefits go on a P11D?+
No. Exempt benefits such as trivial benefits, one company phone and homeworking payments within £6 a week do not need to be reported. Taxable benefits such as private medical insurance or a company car do.
Where these figures come from
The rates and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC, GOV.UK or Companies House page in a new tab.
- Expenses and benefits: tax on trivial benefits www.gov.uk/expenses-and-benefits-trivial-benefits
- Non-taxable payments and benefits (480: Chapter 5) www.gov.uk/guidance/non-taxable-payments-and-benefits-480-chapter-5
- Expenses and benefits: mobile phones, what's exempt www.gov.uk/expenses-and-benefits-mobile-phones/whats-exempt
- Expenses and benefits: medical or dental treatment and insurance, what's exempt www.gov.uk/expenses-and-benefits-medical-treatment/whats-exempt
- Expenses and benefits: homeworking expenses that are exempt from tax www.gov.uk/expenses-and-benefits-homeworking/homeworking-expenses-and-benefits-that-are-exempt-from-tax
- Expenses and benefits: business travel mileage, rules for tax www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax
- Budget 2026: overview of tax legislation and rates (OOTLAR), section 2.7 www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar
- Tax on your private pension contributions: annual allowance www.gov.uk/tax-on-your-private-pension/annual-allowance
- Claim tax relief for your job expenses: working from home www.gov.uk/tax-relief-for-employees/working-at-home
Estimate your limited company tax
The limited company tax calculator turns this guidance into a concrete estimate for corporation tax, dividends and personal take-home, based on 2026/27 HMRC rates.