When it comes to employee perks, it’s not always about grand gestures. Sometimes, a small token of appreciation, like a birthday gift or a festive treat, can have just as much impact.
That’s where trivial benefits come in. These are minor, non-cash gifts that, if handled correctly, don’t need to be reported to HMRC and won’t trigger tax or National Insurance liabilities. The key is making sure they fall within HMRC’s rules.
In this guide, we’ll explain what counts as a trivial benefit, how the exemption works, and what you can and can’t give your team tax-free. We’ll also cover limits for directors, salary sacrifice restrictions, and when gifts cross the line into taxable territory.
At Ryans, we help businesses across the UK stay compliant while gifting their people the right way. Here’s what you need to know.
What Is a Trivial Benefit?
A trivial benefit is a small, low-value gift or perk that employers can provide to staff without having to report it or pay tax and National Insurance. But for it to qualify, it must meet all of the following conditions:
- It cost £50 or less to provide (including VAT)
- It’s not cash or a cash voucher
- It is not a reward for work or performance
- It’s not mentioned in the employee’s contract
If just one of these conditions isn’t met, the benefit becomes taxable and the full amount (not just the portion over £50) must be reported.
Why Does the Trivial Benefit Exemption Exist?
The exemption is designed to make it easier for businesses to show appreciation without red tape. It’s ideal for things like birthday gifts or seasonal gestures, provided the value is low and the gift is genuinely just that: a gift, not a performance bonus in disguise.
How the Rules Work in Practice
Is There a Limit on Trivial Benefits?
For most employees, there’s no annual limit on the number of trivial benefits they can receive, as long as each one separately meets the qualifying conditions.
But for directors of close companies (typically a limited company with five or fewer shareholders who are also directors), there’s a £300 annual cap. Go over this, and anything above £300 becomes taxable.
It’s wise to keep a simple log of what’s been given to directors throughout the year to avoid breaching the threshold.
What About Salary Sacrifice?
Trivial benefits lose their exemption if they’re provided through a salary sacrifice arrangement even if the value is under £50.
Since April 2017, HMRC has made it clear: if an employee gives up part of their salary in return for a benefit, it doesn’t qualify as trivial.
You’ll need to report it and pay tax and NIC based on the higher of the salary given up or the value of the benefit. These must also be included on the employee’s P11D.
Examples of Trivial Benefits
There’s no official list, but here are some common examples that can qualify, provided the other conditions are met:
- A bottle of wine for a birthday
- A box of chocolates at Christmas
- Flowers for a work anniversary
- A seasonal flu jab (not medical treatment)
- Refreshments like tea and coffee in the office
Gift cards can be tricky. If they’re for a specific retailer and can’t be exchanged for cash, they might qualify. But cash cards like prepaid Visa or Mastercard gift cards are always taxable.
Group Gifting and Team Events
If you’re providing a benefit to a group, for example, a team meal and it’s impractical to calculate each person’s individual cost, HMRC allows you to use an average cost per head.
If the average is £50 or less, and the other conditions are met, it still qualifies. Just be sure to apply a sensible approach and keep a clear record of how the figure was worked out.
Avoiding Common Pitfalls
Trivial benefits are a great way to build team morale but missteps can quickly turn them into taxable liabilities.
Some of the most common mistakes include:
- Going over the £50 limit, even by a few pence. HMRC doesn’t allow a buffer.
- Tying the benefit to performance, as soon as it’s a reward for good work, it’s no longer trivial.
- Giving cash or cash-equivalent vouchers as this is always taxable.
- Failing to keep records, especially for close company directors or group benefits.
What Happens If the Rules Aren’t Met?
If a benefit doesn’t qualify as trivial, it must be reported to HMRC and may attract tax and National Insurance.
This is usually done through:
- A P11D form for each affected employee
- A P11D(b) form to declare the Class 1A NICs due from the employer
Alternatively, if you’ve registered for payrolling benefits, you can process them through payroll though a P11D(b) is still required.
Trivial Benefits FAQs
What is a trivial benefit in the UK?
A small gift or perk worth £50 or less, not linked to work performance, not contractual, and not cash. When all four conditions are met, it’s tax-free and doesn’t need to be reported to HMRC.
What is the £50 rule?
Each benefit must cost £50 or less including VAT. Go over by a penny and the whole benefit becomes taxable.
Can I give multiple trivial benefits in a year?
Yes, there’s no limit for employees. But directors of close companies have a £300 total cap per tax year.
Do trivial benefits include cash?
No. Cash and cash-equivalent gifts (like prepaid Visa gift cards) are always taxable.
Can directors receive trivial benefits?
Yes, but they’re capped at £300 per tax year if they’re a director of a close company.
Do gift cards count as trivial benefits?
Only if they’re store-specific, under £50, and can’t be exchanged for cash.
What if the benefit is part of salary sacrifice?
Then it’s not trivial, even if it’s under £50. You’ll need to report it and pay tax on the higher of the salary given up or benefit cost.
What happens if I exceed the £50 limit?
The entire value becomes taxable. It must be reported to HMRC and may be subject to Class 1A NICs.
What is a trivial expense?
These are small, low-value business costs like office refreshments and are not the same as trivial benefits. They’re handled differently in your accounts.
How Ryans Can Help
Trivial benefits are a brilliant way to gift your team without the admin headache but only if you get the details right.
At Ryans, we can help you:
- Review your benefit schemes for compliance
- Advise on gifts and incentives for employees and directors
- Complete and file P11D forms
- Support payrolling of non-trivial benefits
- Plan tax-efficient ways to show staff appreciation
Whether you’re unsure about a one-off gift or want to build a long-term staff wellbeing strategy, we’re here to keep you compliant and your team happy.
Ready to get it right? Contact our tax experts today via tax@ryans-uk.com