Limited company guide
The £50 trivial benefit rule and the £300 director cap, the £150 annual function exemption, long service awards and the conditions that make each one work.
Short answer
A benefit costing £50 or less, that is not cash or a cash voucher, not a reward for work and not contractual, is exempt from tax. Directors of close companies are capped at £300 of trivial benefits a year. Separately, annual staff functions costing up to £150 a head in total across the year are exempt, provided the event is annual and open to all employees.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityA benefit costing £50 or less, that is not cash or a cash voucher, not a reward for work and not contractual, is exempt from tax. Directors of close companies are capped at £300 of trivial benefits a year. Separately, annual staff functions costing up to £150 a head in total across the year are exempt, provided the event is annual and open to all employees.
The four trivial benefit conditions
The £300 annual cap for directors
The annual function exemption
Long service and other exemptions
Before you act
The cost must not exceed £50 including VAT, it must not be cash or a cash voucher, it must not be provided under a contract or salary sacrifice, and it must not be a reward for performance or services.
A store gift card at Christmas qualifies. A £50 bonus for hitting target does not, because it rewards work.
A director of a close company — which covers almost all owner-managed companies — can receive up to £300 of trivial benefits in a tax year, so six £50 benefits. Members of their family or household who are provided benefits by the company count towards the same cap.
Exceed £50 on a single item and the whole amount becomes taxable, not just the excess. A £52 gift is a £52 benefit in kind.
Up to £150 per head per tax year covers annual events such as a Christmas party or summer social. It is a cap, not an allowance: at £151 per head the entire cost becomes taxable.
The event must be annual and open to all employees, or all at a particular location. The cost per head is the total cost including VAT, travel and accommodation, divided by everyone attending, including guests.
A sole director company can hold a qualifying annual event, but keep the spend and the record proportionate and evidenced.
Non-cash long service awards of up to £50 per year of service are exempt after 20 years, with a further award possible after another 10 years.
Other routine exemptions worth knowing are eye tests and glasses for display screen work, health screening once a year, and workplace parking.
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK tax year. Check current GOV.UK guidance, or ask us, before relying on them for your own company.
Primary references
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Up to £300 a year, in individual benefits of no more than £50 each.
No. It is an annual cap per head across all qualifying annual events in the tax year.
No. Cash and cash vouchers are excluded from the trivial benefit exemption and are taxed as earnings.
The exemption is lost entirely and the full £55 is a taxable benefit, not just the £5 above the limit.
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Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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