Trivial Benefits Explained: How to Give Small Perks Without Paying Tax

Ever wondered if you can treat your employees without getting tangled in tax rules?

Perhaps a birthday bottle of wine, a surprise coffee voucher, or a pair of cinema tickets to say thanks — small gestures like these can go a long way. And thanks to HMRC’s trivial benefits rule, they can also be completely tax-free.

In this guide, we’ll break down what qualifies as a trivial benefit, what doesn’t, how much you can spend, and how directors can take advantage, all while keeping everything compliant.

What are trivial benefits?

Trivial benefits are small gifts or perks provided by employers to employees that are completely tax-free, provided they meet specific criteria set out by HMRC.

They are not meant to be performance-related bonuses or salary supplements.

Rather, they’re informal, low-value tokens that help build a positive workplace culture without creating extra admin for payroll or HR.

Think of them as little “just because” moments that make your employees feel valued — without you having to worry about tax implications.

Why does HMRC allow trivial benefits?

Because trivial benefits are, by nature, small and non-essential, HMRC considers them too minor to be worth taxing as long as they’re used appropriately. It’s their way of simplifying small-scale workplace generosity.

The 5 rules that define a trivial benefit

For a benefit to qualify as trivial, every one of the following conditions must be met:

1️. Cost: The benefit must cost £50 or less per employee (including VAT).

2️. Non-cash: It cannot be cash or a cash voucher. Store gift cards are okay as long as they can’t be exchanged for cash.

3️. No reward: It must not be provided as a reward for work or performance — no bonuses disguised as gifts.

4️. Not in the contract: It can’t be written into the employee’s contract of employment.

5️. No salary sacrifice: It must not be part of a salary sacrifice arrangement.

❗If any of these rules are broken, the benefit becomes taxable and must be reported to HMRC, usually on a P11D form.

What happens if you go over the £50 limit?

This is where the rules around trivial benefits become strict — and a little unforgiving.

HMRC’s policy is crystal clear: if a benefit costs even a single penny over £50, then the whole value becomes a taxable benefit.

That means you can’t just write off the £50 and declare the extra £1. You’ll need to report the full amount on a P11D form (or via payroll if you’re payrolling benefits), and your business may have to pay Class 1A National Insurance contributions on it too.

So, if you were thinking of “rounding up” to £51 for something a bit nicer — don’t. That nice gesture could trigger:

• A tax liability for your employee
• Additional NI contributions for your business
• Extra admin and paperwork for payroll or your accountant

🔎 Example:

You buy a gift card for £52 and hand it to an employee just before their annual leave.

It's non-cash and unrelated to work performance — so far, so good.

But because it costs £2 too much, it's no longer a trivial benefit. Instead of being tax-free, it now counts as a benefit in kind — and must be reported.

Moral of the story? Aim for £45 – £49.99 to stay on the safe side. If you’re ordering multiple items or incurring delivery fees, make sure the total cost per head, including VAT, doesn’t exceed £50.

Who can receive trivial benefits?

Understanding who qualifies to receive trivial benefits is just as important as knowing what counts as one.

🔸 Employees

Regular employees can receive as many qualifying trivial benefits as you’d like to provide in a year — there’s no cap on volume or frequency, as long as each one is under £50 and follows the rules.

It’s a flexible way to keep morale high throughout the year, whether it’s through surprise snacks, birthday treats, or end-of-month thank-yous.

That said, avoid making it too routine or expected. If staff start relying on these benefits monthly like clockwork, HMRC could view them as disguised bonuses or part of their regular pay, which would disqualify them from the exemption.

🔸 Directors of close companies

This is where things get more specific. If you’re a director (or an office holder) of a close company — typically a limited company run by five or fewer shareholders — you are subject to a £300 annual cap on trivial benefits.

This £300 limit is:

• Per tax year
• Per individual (not per company)
• Still bound by the £50-per-instance rule
• Inclusive of benefits to family members or household members (if they’re receiving gifts because of your role)

So if you’ve already received six £50 gifts, that’s your allowance done for the year. Go over £300, and you’ll need to report and pay tax on the excess.

Trivial benefits in practice – what counts?

Let’s take a closer look at what a “typical” trivial benefit looks like when applied thoughtfully in a real workplace.

These benefits should be:

• Thoughtful, but not excessive
• Spontaneous, not expected
• Personal, but still within the company’s usual budget

Here are a few more fleshed-out examples based on how businesses across the UK are using trivial benefits:

Seasonal hampers

In December, you send out £40 Christmas hampers to each staff member. They're not bonuses and aren’t based on sales targets. You bought them using a company credit card, and each one is under the limit.

✅ Tax-free

✅ No P11D

✅ No NI contribution

Birthday chocolates

You buy a box of luxury chocolates for an employee’s birthday, costing £35. They aren’t mentioned in any contract, and it’s just a nice way to acknowledge their day.

✅ Trivial benefit

Event tickets

You surprise your team with comedy club tickets that cost £48 each. The event is purely for entertainment, not tied to performance or KPIs.

✅ Also qualifies

These might feel like small gestures, but over time, they create a culture where people feel recognised and appreciated without introducing administrative headaches or compliance risk.

What doesn’t count as a trivial benefit?

The rules may seem generous, but HMRC draws a firm line in certain areas. Let’s break down where many employers slip up, and what you should avoid:

Cash and cash vouchers

Even £10 in cash or a gift voucher redeemable for cash (like Love2Shop or a prepaid Mastercard) will never qualify, no matter how small.

Instead: Use store-specific gift cards that can’t be exchanged for cash, like Costa, Spotify, or Waterstones.

Performance-based gifts

Say you reward your team with a £30 bottle of wine for smashing their quarterly target. Despite being under £50, this is seen as linked to their performance, which makes it taxable.

Instead: Save trivial benefits for non-performance moments like birthdays, random thank-yous, or seasonal gestures.

Contractual benefits

If your employment contract promises a monthly lunch stipend, this automatically becomes part of your pay. Even if it’s £30 per month, it’s not trivial and must be taxed.

Instead: Keep benefits spontaneous and off the books.

What about trivial benefits for sole traders and partnerships?

Trivial benefits aren’t just for limited companies, but if you’re a sole trader or in a partnership, there are specific rules.

✅ Employees of sole traders or partnerships

If you employ staff, you can offer them trivial benefits under the exact same rules as limited companies.

❌ Sole traders and partners themselves

Unfortunately, you can’t give yourself tax-free trivial benefits. HMRC does not recognise the individual (you) and the business (also you) as separate entities.

Alternative tip: If you’re looking to treat yourself through your business, consider other allowable expenses, but avoid trying to disguise them as a benefit.

Do you need to claim VAT on trivial benefits?

If your company is VAT-registered, you can usually reclaim VAT on trivial benefits provided they:

• Are genuinely for business purposes (e.g., to maintain morale or build relationships)
• Aren’t for entertaining customers (which has different rules)
• Comply with the £50 including VAT limit

📍Example:

You spend £41.67 + VAT = £50. That still qualifies, and you can reclaim the VAT portion if the perk is for employees.

Don’t forget to always keep your VAT receipts and itemised invoices if you plan to make a claim.

Trivial benefits for directors – How to build a yearly plan

If you're a director of a limited company, you’re not just allowed to give yourself trivial benefits, you’re encouraged to do so (within HMRC’s rules, of course).

As long as your company qualifies as a close company (which most small limited companies in the UK do), you’re entitled to receive up to £300 worth of trivial benefits per tax year, completely tax-free

This allowance isn’t just a nice-to-have,it’s an underrated tax efficiency opportunity that many directors forget to use. You’re already working long hours, juggling risk, and managing staff. Why not enjoy some compliant, stress-free perks while you’re at it?

Why planning ahead matters

Too often, directors find themselves in March, realising they’ve missed the chance to use the full allowance. But by planning ahead, you can space out benefits, align them with your work schedule or personal milestones, and make the most of this tax-free perk.

A little forward thinking can help you:

• Enjoy small personal rewards without triggering payroll
• Reduce corporation tax (as these perks are allowable business expenses)
• Stay compliant without additional admin headaches

Let’s look at a few example plans.

Sample director trivial benefit calendar

Here’s how a single director might plan their benefits over the tax year:

That’s a full year’s worth of thoughtful, practical, and tax-free gifts, all within the £300 limit and £50-per-instance rule.

What about the director’s family?

You can also provide trivial benefits to members of your household, but only if the reason for the gift is related to your role as a director.

Let’s say your company sends a Christmas gift basket to your household, not just you. That’s allowed, but the cost counts toward your £300 director limit.

🧾 Extra tip: Keep a clear note of who received the benefit and how it links back to your director role to justify it if HMRC ever checks.

Can directors still claim business expenses?

Yes, but this is separate.

Trivial benefits are perks for personal use that fall under a specific exemption. Other allowable business expenses (like travel, client lunches, and professional subscriptions) are still handled separately through your accounts.

So don’t confuse them.

If it’s a business cost, log it as an expense. If it’s a personal perk (not work-related), and it’s under £50, and passes all HMRC conditions, use it as a trivial benefit.

How to keep records of trivial benefits (and why you should)

While trivial benefits don’t need to be formally reported to HMRC (as long as they meet all the rules), keeping good internal records is essential, especially if you’re offering them regularly or you’re a director approaching the £300 annual limit.

Imagine an HMRC enquiry a year from now. Could you prove:

• Who received the benefit?
• What exactly was given?
• When it was given?
• How much it cost (including VAT)?
• That it wasn’t cash, performance-related, or part of a contract?

If not, you could find yourself retroactively paying tax, NI, or facing compliance issues, even for something as innocent as a gift card.

✅ What to track

A basic spreadsheet or digital log should include:

• Employee/director name
• Date of benefit
• Description of item or service
• Total cost per head (incl. VAT and delivery)
• Why it qualifies under trivial benefit rules

But manual tracking isn't always practical, especially if you're juggling bookkeeping, taxes, and your actual business. That’s where smart tools can help.

How ANNA helps you stay compliant (effortlessly)

If you want to streamline all of this, trivial benefits included — ANNA’s +Taxes platform offers an all-in-one solution for busy business owners who don’t want to deal with tax chaos.

It’s your central hub for managing compliance, bookkeeping, and even tracking perks like trivial benefits, all from one intuitive dashboard:

1️. Smart receipt scanner

Snap a photo of your gift receipt, whether it’s flowers, a meal, or a store voucher, and ANNA will automatically match it to your business transaction and categorize it for your accounts. Great for trivial benefit tracking.

2. Automatic expense sorting

Every expense is categorised intelligently (e.g., "Staff perks" or "Director benefit") so your bookkeeping stays tidy and tax-efficient. No spreadsheet needed.

3. Pots for tax

ANNA automatically puts aside a portion of your income to cover VAT, PAYE, or Corporation Tax. You could even create a dedicated “Trivial Benefit Pot” to monitor how much you’ve spent , especially useful if you’re tracking the £300 director cap.

4️. Personalised tax calendar

Never miss a filing date again. ANNA will remind you when to file VAT, PAYE, or Corporation Tax and help you prepare in advance.

5. Tax Terrapin: Your AI-Powered Tax Assistant

Have a question like “Does this birthday gift count as a trivial benefit?” Just ask Tax Terrapin, ANNA’s built-in AI tax bot, powered by ChatGPT. It gives fast, accurate answers and links to official HMRC guidance.

6. Bookkeeping score

ANNA’s Bookkeeping Score feature helps you maintain a tidy ledger by guiding you through small weekly tasks, like correctly tagging expenses,which can directly improve your tax savings.

🌟 All-in-one support for UK business owners

Whether you're:

• Tracking gifts for your team,
• Managing your first PAYE payroll run,
• Filing your first Corporation Tax return, or
• Trying to avoid tax pitfalls as a limited company director...

ANNA +Taxes has you covered.

And if you’re just getting started? You can try it for £3/month for the first 3 months, then it’s £24/month + VAT, a cost many businesses recoup just from better tax planning and expense tracking.