Trivial benefits
A trivial benefit is a small non-cash gift from the company that is exempt from tax and reporting: £50 or less, not cash, not a reward for work and not contractual. Directors of close companies are capped at £300 a year.
How it works
The exemption is narrow but genuinely useful. Each benefit must cost the company £50 or less including VAT, must not be cash or a cash voucher, must not be a reward for performance or in the employee's contract. Meet all four and there is nothing to report and no tax or National Insurance for anyone.
For directors of close companies — which covers almost every owner-managed company — there is an annual cap of £300, or six £50 benefits. The cap applies per director, so a couple who are both directors have £600 between them. Ordinary employees have no annual cap, only the £50 per benefit limit.
Exceed £50 on a single item and the whole amount is taxable, not just the excess. A £52 hamper is a fully taxable benefit. Where a gift is provided to several people and the cost cannot be sensibly split, HMRC looks at the average cost per head.
Keep it separate from the annual function exemption, which allows up to £150 a head across the year for events such as a Christmas party, and from staff entertaining, which follows its own rules.
Who this affects
- Directors of close companies using the £300 annual cap
- Employers giving small birthday or seasonal gifts
- Companies wanting a modest tax-free perk without payroll complexity
- Anyone buying a gift slightly over £50, which loses the exemption entirely
Common mistakes
- Giving cash or a cash voucher, which is always taxable
- Spending £51 and losing the exemption on the whole amount
- Linking the gift to performance, which makes it a reward
- Exceeding the £300 annual director cap without tracking it
Frequently asked questions
How much is the trivial benefits limit?
£50 or less per benefit, with a £300 annual cap for directors of close companies.
Can I give a gift card?
Yes, if it is a store voucher of £50 or less that cannot be exchanged for cash. Cash vouchers are excluded.
Does the company get tax relief?
Trivial benefits for employees and directors are generally deductible as staff costs, unlike client entertaining, which is never allowable.
Is it the same as the £150 Christmas party allowance?
No. The annual function exemption of £150 a head is separate and can be used alongside trivial benefits.
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Reviewed by Waqas Sagar ACA FCCA FMAAT · Last reviewed 13 September 2026 · Figures for 2026/27 · About our practice
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