How You Can Give Trivial Benefits

Employers can give certain gifts to employees without paying tax or National Insurance Contributions. HMRC allows this under specific conditions through ‘trivial benefits’. These are small, tax-free perks that an employer can provide which don’t attract Class 1A National Insurance. From 6 April 2025 to 5 April 2026 the Class 1A rate is 15%.

This article outlines what counts as a trivial benefit, the rules to follow, and the restrictions for directors, employers, and employees.

Conditions of Trivial Benefits

The following criteria must all be met for a benefit to be considered trivial:

• Costs the employer £50 or less to provide
• Is not cash or a cash voucher
• Is not a reward for work or performance
• Is not in the terms of the employee’s contract

If these conditions are met, the employer does not have to report this benefit to HMRC on a Form P11D.

How It Works for Employees

There is no annual limit on how many trivial benefits an employee can receive, as long as each individual gift meets the £50 cost cap and the other conditions.

If the cost of providing the benefit is over £50, the full amount is taxable (not just the excess amount over £50).

Close Company Directors

Directors of “close companies” (limited companies controlled by five or fewer shareholders) can receive up to £300 worth of trivial benefits per tax year. This total also includes any benefits given to their family or household members.

It’s therefore important to keep accurate records to ensure the £300 threshold is not exceeded, as once it is, the full value of that benefit becomes taxable.

Groups of Employees

Trivial benefits can also be provided to groups. The total cost can be more than £50, as long as the average cost per employee is £50 or below. For example, a group dinner that costs £240 for 5 employees gives an average cost of £48 per employee, so therefore would qualify as a trivial benefit.

However, if a benefit is given as part of a salary sacrifice arrangement, it no longer qualifies as trivial. In these cases, the employer must report on Form P11D the higher of the salary given up and the cost of the benefit.

Examples Of Trivial Benefits

Here are some common examples that qualify:

• A birthday gift such as flowers or chocolates
• A seasonal gift, such as a Christmas Hamper
• A meal out with employees to celebrate a special occasion
• A gift to mark a significant life event such as a wedding or birth of a child

It is important to note that long service and thank you gifts do not qualify as trivial benefits as they are linked to meeting performance targets.

Why Offer Trivial Benefits?

Trivial benefits are an excellent way to show appreciation to your employees whilst keeping it tax efficient:

• Tax efficient: The company receives Corporation Tax relief on the cost, and there are no Tax or National Insurance contributions for either the employer or employee.
• No reporting: As long as the benefits adhere to the rules, employers do not need to report them to HMRC on a P11D form, which reduces administrative burden.
• Improved morale: Small gifts and perks are an effective way to boost employee morale, show appreciation, and foster a positive workplace culture