What Are Tax-Free Trivial Benefits?
Trivial benefits are small perks given to employees.
They’re tax-free if they meet certain conditions.
Employers can give these without triggering tax or National Insurance.
Think of them as small gifts, not rewards.
HMRC sets strict criteria, so don’t get caught out.
Why Should Employers Care?
Trivial benefits save tax.
They also boost morale and goodwill.
Employees appreciate the thought behind these small perks.
You avoid extra tax charges or reporting duties.
Get it right and everyone wins.
Four Rules for a Trivial Benefit
To count as trivial, the benefit must meet all four conditions.
Miss one, and it becomes taxable.
Firstly, it Can’t Be Cash or a Cash Voucher
No notes, coins, or vouchers exchanged for cash.
Gift cards that can’t be converted into cash may qualify.
Secondly, it Must Cost £50 or Less
That’s the total cost to the employer.
If shared among staff, use the average cost.
Thirdly, it Can’t Be a Reward for Work
The benefit must not recognise specific services.
Gifts for working late don’t qualify.
This includes taxis home or meals as a thank-you.
Finally, It Must Not Be in a Contract or Salary Sacrifice
No contractual perks.
That includes both written and implied obligations.
Cream cakes every Friday? That may count as implied.
Special Rules for Directors and Office Holders
Are you a director of a close company?
Your exemption is capped at £300 a year.
That cap also applies to family or household members.
A close company usually has five or fewer shareholders.
You can spread the £300 across several small benefits.
Stay under the cap to keep it tax-free.
How to Calculate the Cost of a Trivial Benefit
Normally, use the actual cost to you.
Bought a £45 bottle of wine? The cost is £45.
Gave out multiple items to staff? Use the average.
Example: £500 spent on 20 staff = £25 each.
So, it’s under the £50 limit – all good.
Pitfall 1 – Don’t Use It as a Work Reward
This is the most common mistake.
Gifts for working overtime or reaching a target don’t count.
HMRC sees these as a reward for service.
Even if they cost under £50, they become taxable.
Save your thank-yous for another method.
Pitfall 2 – Salary Sacrifice Doesn’t Work Here
You can’t use trivial benefits under a salary sacrifice deal.
If an employee gives up salary for a benefit,
The exemption no longer applies.
Even if the item costs £20, it becomes taxable.
Keep trivial benefits separate from pay negotiations.
Pitfall 3 – Implied or Contractual Benefits Disqualify
Check employment contracts carefully.
Stated or implied rights to gifts remove the exemption.
Cream cakes on Fridays? HMRC might see that as expected.
If staff expect something regularly, it may be taxable.
Document what’s discretionary and what’s not.
Pitfall 4 – Recurring Benefits Add Up
Beware of apps, subscriptions or gift cards used monthly.
The total annual cost matters, not the one-off price.
Example: monthly £40 beauty treatments = £480 annually.
That exceeds the limit, so it’s taxable.
Stick to one-off perks to stay within the rules.
What Qualifies as a Trivial Benefit?
Here are safe examples:
- A birthday bottle of wine under £5
- A Christmas hamper worth £40
- A coffee shop gift card (not cash-convertible)
- A bunch of flowers to celebrate a non-work event
Check the cost and make sure it’s not a reward.
What Doesn’t Qualify?
These benefits will trigger tax:
£60 meal out after hitting a sales target
£50 taxi home for working overtime
Monthly gym membership, even if each session costs under £50
Vouchers exchanged for cash
Any benefit linked to performance
How to Stay on the Right Side of HMRC
Create a written trivial benefits policy.
Train your managers to understand the rules.
Use software or spreadsheets to track spending.
Review director benefits to ensure you don’t exceed £300.
Avoid recurring or contractual patterns.
Always ask: “Would HMRC see this as a reward?”
Internal Guidance and Support
Need a template for your policy?
Want to make sure your benefits stay compliant?
We help businesses avoid costly tax errors.
Speak to us before HMRC does.
See more about employee benefits and tax on our blog.
Let’s Get It Right Together
Trivial benefits are a powerful, tax-free tool.
But they need careful handling.
Get advice. Keep receipts. Train your team.
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