Here we explain what qualifies as a ‘trivial benefit’ according to HMRC guidance, and how you can reward your staff and company directors with a simple gift or benefit without it being taxed or triggering National Insurance contributions.
Is this new?
No. Trivial benefits have been around for years, and many employers have used them to provide small perks like tea and coffee, a turkey at Christmas, a team meal, or flowers for a birthday.
In April 2016, a statutory exemption was introduced under the Finance Act 2016. This put the rules on a formal footing and gave company directors more confidence that small one-off gifts wouldn’t fall foul of benefit-in-kind rules.
Before that, minor gifts were judged on a case-by-case basis, and some employers avoided them altogether to be safe. The 2016 change made things more straightforward and more predictable.
Importantly, trivial benefits are not the same as taxable benefits-in-kind such as company cars, private healthcare, nursery fees, or gym memberships. These are still reportable and usually subject to tax and Class 1A NICs.
The cost of the benefit is £50 or less, including VAT. If you take a group out for a meal, the cost can be averaged at £50 per person.
The benefit is not cash or a cash voucher. Gift cards up to £50 are fine, as long as they can’t be exchanged for cash.
The benefit is not part of the employee’s contract.
The benefit is not given in return for services performed as part of their role.
For directors of close companies, the total value must not exceed £300 per tax year.
All five conditions must be met. If just one fails, the benefit becomes fully taxable.
Don’t exceed the limit
If the cost exceeds £50, even by a few pence, the entire value becomes a taxable benefit. You can’t just report the difference – the whole amount is caught.
Trivial benefits cannot be rolled up into an annual allowance or claimed against Corporation Tax as a bulk figure. Each benefit needs to be separate, and ideally backed by a receipt.
The exemption only applies to genuine gifts. If you give something in return for doing a piece of work – for example, finishing a project or hitting a sales target – that would likely be seen as a reward, not a trivial benefit.
If the benefit is provided under a salary sacrifice arrangement, it doesn’t qualify for the exemption and must be reported on a P11D. See: HMRC salary sacrifice guidance.
Rules for close companies
If you are a director of a close company (typically one with five or fewer shareholders), the trivial benefit cap is £300 per tax year.
This is a separate annual cap that applies in addition to the general £50-per-item rule. You can give multiple gifts during the year, but the total value for each director (and their household) must not exceed £300.
Spouses or children who receive benefits as members of your household must be counted within your £300 allowance. Keep proper records for each benefit, especially if you’re audited.
Examples of trivial benefits
A meal out to celebrate finishing a project (as long as it’s not a reward for completing the work)
A garden party or informal staff event with partners
Flowers for a birthday, anniversary, or new baby
A Christmas or festive gift, such as wine, chocolates, or a gift voucher
It’s often the context that matters. For example, buying a bottle of wine as a spontaneous thank-you is fine. Promising a gift in exchange for hitting a deadline is not.
If you’re not sure whether a benefit qualifies, contact the HMRC employer helpline for clarification.
