The remuneration extras most owner-directors overlook

For owner managed limited companies, the big conversations about pay tend to revolve around salary, dividends, and pension contributions. That foundation genuinely matters. Getting these right makes the biggest difference to your tax bill, which is why so much planning time rightly goes into them.

But they aren’t the full story.

On top of your salary and dividend package, there are additional layers of remuneration that are often overlooked.  

These are really useful but are often disregarded because each item, on its own, is quite small and governed by potentially fiddly rules. But when combined and planned properly with the right advice, they can be worth a few thousand pounds a year in tax-efficient value.

Here’s what to consider.

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Home-working allowance

Up to £6 per week (£312/year) can be paid tax-free to cover additional household costs when working from home under a homeworking arrangement, subject to the hours you run your company from home, under HMRC’s flat-ratr allowance

Receipts generally aren’t needed at this level, but for higher claims under the actual costs method, you’ll need evidence of additional costs.

For many owner-directors in tech businesses, where home working is already the norm, this one is a no-brainer.  

There are, however, some strict qualifying rules here, so be sure to check those out!

Trivial benefits

A benefit costing £50 or less is exempt from tax, and NI, provided it is not in cash, not a reward for work, and not contractual.  

For directors, there’s a £300 annual cap (six £50 benefits), meaning each Director can extra a further £300 each tax year tax free, and is a corporation tax deduction for the company.

For other employees, the cap is per-benefit rather than per-year, which is worth bearing in mind if you have staff.

Examples include small hampers, wine, flowers, or a gift voucher that can’t be exchanged for cash. A meal out that isn’t the annual party also qualifies.

The golden rule? Always keep records. You’ll need them for your tax return.

Business mileage (in your own car)

55p per mile for the first 10,000 business miles in the tax year, 25p per mile after that, for mileage undertaken in a personal vehicle. (HMRC increased the approved mileage rate from 45p to 55p with effect from 6 April 2026.)

This is paid by the company to you tax-free and is a corporation tax deduction for the company.

If you drive to client sites, co-working spaces other than your normal place of work, or industry events, always keep a log. The records support your mileage claim.

Mobile phones

One phone per employee (provided in the company’s name) is exempt from tax and NI. This includes calls, data, and the device itself.

The contract must be in the company’s name, not yours. That one detail is what makes the exemption work.

The cost of the mobile phone, calls and data are all deductible for corporation tax purposes.

Electric company car

The benefit-in-kind rate for zero-emission vehicles is 4% for 2026/27, which means certain vehicles can be very tax efficient.

For a £50,000 EV, that’s a BIK of £2,000 (2026/27), taxed at your marginal income tax rate, which put simply, would cost:

• A basic rate (20%) tax payer £400 in income tax
• A higher rate (40% tax payer £800 in income tax
• An additional rate (45%) tax payer £900 in income tax

The company buys the car outright or on lease, reclaims VAT where eligible, deducts the outright cost and running costs against corporation tax.

Important: rates are rising by 1 percentage point per year through 2027/28, then by 2 percentage points per year in 2028/29 and 2029/30, so the planning window is narrowing. It’s definitely worth a chat if you’re due for a car in the next 12 months, or are considering a company vehicle.

Training and professional development

Training that’s relevant to your current role is fully deductible for the company and creates no benefit-in-kind for you personally.

This is really useful. However, genuinely new skills for a different role can make things more complex, so be sure to ask an expert if you’re unsure.

Professional subscriptions

Membership fees to HMRC-approved professional bodies are deductible.

This may include industry body subscriptions and, depending on your circumstances, membership of bodies like Sheffield Digital. All of this is worth checking against HMRC’s list.

Health screening and eye tests

One health screening and one medical check per employee per year are exempt.

Eye tests and corrective glasses specifically for VDU use are also exempt. Given how much time most of us spend in front of a screen, this one is easy to miss and easy to use.

Interest on a director’s loan to the company

If you’ve lent money to your own company, it can pay you interest on that loan.

The interest is deductible for corporation tax and taxable for you, but falls under the savings income rules, which means the Personal Savings Allowance and the £5,000 starting rate for savings can apply.

In some circumstances, the first £5,000 of interest income is genuinely tax-free. The company must deduct 20% income tax at source and report on form CT61, so it needs to be done correctly, which means it isn’t always practical.

How could this look in practice?

None of these items will change the game completely. But combined, they add up.

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The table explained

Around £1,150 of tax-free personal value for £935 of company cost. In real terms, this is a better effective rate than almost any equivalent incremental salary or dividend increase could deliver!

But there are several components here, so careful planning is essential to ensure you are both compliant and using each appropriately for maximum benefit. As always, speak to your accountant if you really want to get this right.

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This article is for general information only and not a substitute for personal advice. If you’d like us to model your exact numbers, get in touch today.

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