Answers · UK 2025/26

What is the trivial benefits exemption and how much can employers give tax-free?

The trivial benefits exemption lets an employer give staff small gifts or perks worth £50 or less, tax and NI-free, provided the benefit is not cash or a cash voucher and is not a reward for work performance. Directors of close companies face an additional annual cap of £300 in total trivial benefits per tax year.

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The trivial benefits exemption allows employers to provide small, occasional perks to employees without any Income Tax, National Insurance, or reporting obligations, provided several specific conditions are all met. **The conditions for a benefit to qualify as "trivial"** 1. The cost of providing the benefit does not exceed £50 (including VAT). 2. The benefit is not cash or a cash voucher (a store voucher or gift card is generally fine, provided it cannot be exchanged for cash). 3. The employee is not contractually entitled to the benefit -- it must be genuinely discretionary. 4. The benefit is not provided in recognition of particular services performed as part of the employee's duties (it cannot be a disguised reward or bonus, such as "well done on hitting your sales target, here's a £40 voucher"). **No limit on the number of trivial benefits for most employees** For ordinary employees (not directors of close companies), there is no cap on how many separate trivial benefits they can receive across a tax year, as long as EACH individual gift meets all four conditions above and costs £50 or less. **The £300 annual cap for directors of close companies** For directors (and other office holders) of a close company -- broadly, a company controlled by five or fewer shareholders, which covers most small owner-managed limited companies -- the total value of trivial benefits is capped at £300 per tax year. In practice, this often works out as roughly six qualifying £50 gifts across the year, since each individual gift must still separately meet the £50 limit. **Family members count towards the director's cap too** If a trivial benefit is given to a member of a director's family or household (who is not themselves an employee or office holder of the company), its value counts towards that director's own £300 annual cap, not a separate allowance. **Worked example** A small limited company with one director gives the director a £45 bottle of wine for their birthday, a £40 flowers delivery when their child was born, and four separate £45 seasonal gift cards across the year (Christmas, Easter, etc.) -- six gifts totalling £270. Because each individual gift is under £50 and the running total stays below £300, none of it is taxable, and none needs to be reported to HMRC. If the same director then received a seventh £50 gift, taking the running total to £320 -- exceeding the £300 cap -- the WHOLE of that seventh gift (not just the £20 excess) would become taxable, though the earlier six gifts remain exempt. **What does NOT qualify** A single gift costing £55 does not qualify at all, even partially -- the whole £55 becomes taxable, since the exemption only applies if the cost does not exceed £50. Similarly, a Christmas bonus paid in cash, however small, is never covered by the trivial benefits exemption, since cash and cash vouchers are always excluded. **Separate from the annual function exemption** The trivial benefits exemption is separate from, and can be used alongside, the annual party exemption (which allows up to £150 per head for annual events like a Christmas party, subject to its own separate conditions).