10 tax reliefs UK business owners often miss (2026/27)
The reliefs UK business owners miss most often are small and tax-free: £50 trivial benefits (capped at £300 a year for close company directors), a £150-a-head staff event, £6 a week for working from home, 55p a mile for business driving, employer pension contributions, an electric company car, a company phone, interest on loans to your company and your personal allowances.
By George Nicholson BFP ACA, ICAEW Chartered Accountant · Last reviewed 20 October 2026
Which tax reliefs can business owners claim in 2026/27?
Each relief links to its GOV.UK rule.
| Relief | 2026/27 limit | Who can use it |
|---|---|---|
| Trivial benefits | £50 a gift; £300 a year for close company directors | Employees and directors |
| Annual staff event | £150 a head, including VAT | Employers |
| Working from home | £6 a week (£26 a month) | Employees who regularly work from home |
| Business mileage | 55p a mile for the first 10,000 miles, then 25p | Employees using their own car or van |
| Employer pension contributions | Annual allowance £60,000 | Directors and employees |
| Electric company car | 100% first-year allowance; 4% benefit in kind | Companies and their directors |
| Mobile phone | One phone or SIM card per employee | Employees and directors |
| Interest on a director's loan | Commercial rate, 20% tax deducted | Directors who lend to their company |
| Personal allowances | £500 dividends; up to £1,000 savings interest; £20,000 ISA | Everyone |
| Personal Allowance taper | Lost between £100,000 and £125,140 | Higher earners |
1. Trivial benefits: what can my company give me tax-free?
Small non-cash gifts, such as flowers, a meal or a gift card, are tax-free if each costs £50 or less, is not cash or a cash voucher, is not a reward for work or performance and is not in a contract (GOV.UK: trivial benefits). Go over £50 and the whole amount is taxable. Directors of close companies, which includes most owner-managed companies, are capped at £300 a year, and gifts to their family or household count towards it (HMRC manual EIM21864).
2. Staff events: how much can I spend on a Christmas party?
An annual party or similar event open to all employees is free of tax and National Insurance if it costs £150 a head or less in the tax year (GOV.UK: social functions). The cost per head includes VAT, transport and any overnight stay, divided by everyone who attends, guests included (HMRC manual EIM21690). It is not an allowance: go over £150 and the whole cost is taxable. Several events are fine if their combined cost stays within £150 a head.
3. Working from home: what can my company pay me?
If you regularly work from home under an agreed arrangement, your employer can pay £6 a week (£26 a month) tax-free without receipts (GOV.UK: homeworking expenses). It can pay more if the amount is backed by records of your actual extra household costs, such as heating and electricity, or by a scale rate agreed in advance. Anything above your actual extra costs is taxable pay (HMRC manual EIM01476). From 6 April 2026 employees can no longer claim this relief from HMRC themselves (GOV.UK), so the company payment is the route that works.
4. Business mileage: are you claiming the full 55p a mile?
From 6 April 2026 your company can pay you 55p a mile tax-free for the first 10,000 business miles in your own car or van, then 25p, up from 45p (GOV.UK: mileage rates). For National Insurance, 55p applies to every business mile. Motorcycles are 24p and bicycles 20p. Ordinary commuting does not count, but travel to a temporary workplace can (GOV.UK: travel expenses). Keep a mileage log, and let our mileage calculator do the sums.
5. Employer pension contributions: why are they so tax-efficient?
A contribution your company pays into a registered pension scheme for you is normally a deductible expense, provided your overall pay package is reasonable for your work (HMRC manual BIM46035). It is not taxed on you as earnings (EIM01570) and carries no National Insurance (NIM02716).
It does count towards your annual allowance, which is £60,000 for 2026/27 (GOV.UK: pension schemes rates). You can carry forward unused allowance from 2023/24, 2024/25 and 2025/26, earliest year first, but only for years in which you were a member of a registered pension scheme (GOV.UK: unused annual allowances). The allowance tapers to a minimum of £10,000 if your threshold income is over £200,000 and your adjusted income over £260,000. If you have already drawn pension money flexibly, a £10,000 money purchase annual allowance caps defined contribution savings, and unused money purchase allowance cannot be carried forward.
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6. Electric company cars: what is the benefit in kind for 2026/27?
A new, unused zero-emission car bought by your company gets a 100% first-year allowance, so the whole cost is deducted in the year of purchase. The allowance runs to 31 March 2027 for companies (GOV.UK policy paper). The benefit in kind is 4% of the list price in 2026/27, rising to 5% in 2027/28 (GOV.UK: company car percentages). On a car with a £40,000 list price, that is a £1,600 benefit: £640 of income tax for a higher rate taxpayer in England, Wales or Northern Ireland, plus £240 of Class 1A National Insurance for the company at 15%. Our payroll service handles the P11D and Class 1A reporting for benefits like this.
7. Mobile phones: can my company pay for my phone?
Yes. Your company can provide one mobile phone or SIM card per employee with no tax, National Insurance or reporting, as long as the contract is between the company and the provider (GOV.UK: mobile phones). A contract in your own name, or a salary sacrifice arrangement, does not qualify.
8. Interest on loans to your company: how does it work?
If you have lent your company money, it can pay you commercial interest. The interest is a business expense for the company and income for you, with no National Insurance. The company must deduct 20% income tax, pay you the rest, and report and pay the tax every quarter on form CT61 (GOV.UK: lending your company money). You report the gross interest on your tax return, where your savings allowances may refund the tax deducted.
9. Personal allowances: are you using all of yours?
Everyone has a £500 dividend allowance, a Personal Savings Allowance of £1,000 at basic rate (£500 at higher rate, nil at additional rate) and a £20,000 ISA allowance. Couples can use two sets by holding savings in the name of whoever pays less tax. From 6 April 2027 savings income tax rates rise by 2 percentage points and under-65s can put no more than £12,000 a year into cash ISAs.
10. The £100,000 line: how do I avoid the 60% tax trap?
Your Personal Allowance falls by £1 for every £2 of adjusted net income above £100,000 and is gone at £125,140 (GOV.UK: income over £100,000). On salary in that band, that is an effective income tax rate of 60% in England, Wales and Northern Ireland. Personal pension contributions and Gift Aid are grossed up and deducted when working out adjusted net income, so they can bring you back under £100,000. Directors can also take less salary or dividends and have the company pay into a pension instead. Our take-home pay calculator shows the effect on a salary.
Worked example: what are these reliefs worth to a sole director?
A director uses four of the reliefs in a year:
| Relief | Amount |
|---|---|
| Trivial benefits | £300 |
| Annual staff event | £150 |
| Working from home (52 weeks at £6) | £312 |
| 2,000 business miles at 55p | £1,100 |
| Taken out with no personal tax | £1,862 |
The company also saves Corporation Tax on the £1,862, at a rate that depends on its profits (HMRC manual CTM03925):
| Company's taxable profits | Corporation Tax rate | Saving on £1,862 |
|---|---|---|
| Up to £50,000 | 19% small profits rate | £354 |
| £50,000 to £250,000 | 26.5% effective marginal rate | £493 |
| Over £250,000 | 25% main rate | £466 |
The limits assume a 12-month accounting period and no associated companies. Taken as a dividend instead, the same £1,862 would come out of taxed profit and cost a higher rate taxpayer about £666 in dividend tax once their £500 allowance is used. The mileage payment reimburses real motoring costs, so not all of it is a pure saving.
Our corporation tax and personal tax services build these reliefs into your planning. For more ideas, try our tax savings calculator or read how to pay yourself as a director.
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Frequently asked questions
What is the trivial benefits limit for directors?
Each trivial benefit must cost £50 or less, must not be cash or a cash voucher and must not be a reward for work. Directors of close companies, which includes most owner-managed companies, can receive no more than £300 of trivial benefits a tax year, including gifts to their family or household.
Can my company still pay me £6 a week for working from home?
Yes. Your employer can pay up to £6 a week, or £26 a month, tax-free without receipts if you regularly work from home under an agreed arrangement. What ended on 6 April 2026 was the employee's own claim to HMRC when the employer pays nothing.
Are employer pension contributions tax-deductible for my company?
Usually, yes. Employer contributions to a registered pension scheme are normally an allowable expense if your overall pay package is reasonable for your work. They are not taxed on you as earnings and carry no National Insurance, but they count towards your £60,000 annual allowance for 2026/27.
How do I avoid the 60% tax trap between £100,000 and £125,140?
Bring your adjusted net income below £100,000. Personal pension contributions and Gift Aid donations are grossed up and deducted when working out adjusted net income, and directors can take less salary or dividends and have the company pay into a pension instead.
Written and reviewed by George Nicholson BFP ACA, ICAEW Chartered Accountant. Last reviewed 20 October 2026. This page is general information, not personal advice.
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