We’ve all gone to pay for something at the till and pulled out the wrong card. Don’t fall into the habit of mixing up your money, because it is important to keep your personal money and your company’s money completely separate.

If you use your company’s bank card to buy personal items or to pay your own bills, that expenditure is treated as a loan to you. The loan creates a corporation tax charge if it is not cleared within nine months of the company’s year end and may create a personal tax charge for you.

However every rule has exceptions. Your company can purchase occasional unsolicited gifts for your family and you with no tax implications, subject to the following:

  • the item costs no more than £50 (VAT inclusive);
  • it is not cash or a cash voucher;
  • you are not entitled to receive the item as part of any contractual obligation; and
  • it is not provided in recognition of services that you perform for the company.

The gifts can be anything from sandals to handbags, books to booze. Linked gifts such as a monthly subscription count as one purchase so would break the £50 limit.

A director can only receive up to £300 worth of such trivial gifts tax-free each tax year, including gifts to family members.

If you need advice on keeping your personal and company money separate, don’t hesitate to get in touch.