Running a limited company means keeping a close eye on your finances, but it doesn’t mean you have to miss out on small perks. If you’ve never come across the term “trivial benefits” before, you’re not alone. They’re one of those quiet little tax perks that can make a difference without tripping you up with HMRC.
In this blog, we’re going to look at what trivial benefits are, how they work for directors, and how to use them wisely to add a few feel-good extras to your business, all while staying within the rules.
What Are Trivial Benefits?
Trivial benefits are small gifts or treats that your company can provide to employees, including directors, without incurring tax, National Insurance, or the need to report them to HMRC.
To qualify as a trivial benefit, it must meet all four of these conditions:
- The cost is £50 or less, including VAT
- It isn’t cash or a cash voucher (store vouchers are fine)
- It isn’t a reward for work or performance
- It isn’t part of the employee’s contractual entitlement
If a gift fails any one of those criteria, it is not classified as trivial and becomes a benefit-in-kind (BIK), which may need to be reported and taxed.
Subscribe to our blog
Examples of Trivial Benefits (and What Doesn’t Count)
Qualifying as trivial
- A £40 M&S voucher at Christmas
- A bottle of prosecco to say “well done” (not performance-related)
- Flowers or chocolates for a birthday
- A spontaneous treat like cinema tickets or afternoon tea
- A takeaway lunch for the team, not linked to overtime or hitting targets
Not trivial
- A £55 Amazon voucher — even though it’s a one-off, it’s over the £50 cap
- A £20 cash thank-you — cash is never allowed
- A £45 gift given specifically for hitting sales targets — it’s performance-related
- A gym membership or subscription — these are ongoing and not “trivial” in HMRC’s eyes
- Anything that’s written into the employment contract
Do the £50 and £300 Limits Include VAT?
Yes — the £50 includes VAT. Even if your company can reclaim the VAT, HMRC still considers the total cost, not just the net amount. If something costs £41.67 + VAT = £50, that’s fine. If it’s £42 + VAT = £50.40, then the entire gift becomes taxable — you don’t just tax the excess.
It’s a hard rule, not a guideline — so rounding up isn’t advised.
Can Directors Receive Trivial Benefits?
Yes, directors can enjoy trivial benefits, but there are a few extra conditions.
If you’re a director of a close company (broadly speaking, a limited company with five or fewer shareholders, where the shareholders are also directors or their relatives), there’s an annual cap of £300 per tax year. That usually means up to six benefits of £50 or less, provided each one meets the same conditions listed earlier.
Key points for directors:
- The £300 limit is per tax year, not per gift
- Gifts must still meet the standard conditions — not performance-related, not cash, etc.
- You can’t bundle the whole £300 into a single gift
- If you go over the £300 total, the excess becomes taxable
Why Use Trivial Benefits in Your Business?
There are several reasons why trivial benefits are worth thinking about:
- It’s tax-efficient: For directors and staff alike, it’s a way to extract value without extra tax or reporting.
- It builds goodwill: Small, thoughtful gifts boost morale more than you might expect.
- It’s flexible: There’s no set schedule — you can use them as and when the occasion arises.
- It sets a positive tone: In small teams, small gestures can make a significant impact.
Let’s say you give your team cinema tickets after a busy month-end — it’s tax-free, appreciated, and gives you a chance to say thanks without the complications of formal bonuses.
Practical Tips for Using Trivial Benefits
- Track them: Keep a spreadsheet with the cost, date, and reason for each benefit — this helps if HMRC ever asks questions.
- Stay under £50: Allow for VAT and delivery charges — they count too!
- Use them intentionally: Spread them across the year rather than bunching them up. For instance, you could give a £ 50 voucher for a job well done in the first quarter, a £ 50 gift for a birthday in the second quarter, and a £ 50 treat for hitting a personal milestone in the third quarter.
- Explain the rules to staff: If others are purchasing gifts on behalf of the business, they need to understand the £50 limit and other conditions.
And remember — a thoughtful £30 gesture often feels more genuine than a maxed-out £49.99 voucher every time.
Conclusion
Trivial benefits are one of those rare, low-effort, high-reward tax perks. Used wisely, they allow you to add a human touch to your business, without the admin headache or cost of traditional benefits.
For directors, it’s a chance to extract up to £300 a year tax-free. For staff, it’s a great way to show appreciation and maintain high morale. But remember, it’s crucial to stick to the rules and keep things under £50 (VAT included!).
Call to Action
Are you using your company perks to their full advantage?
Book a chat with BBK Accounts — we’ll help you maximise your director benefits without overstepping the mark.
FAQS: Trivial Benefits for Directors
Technically, yes, but it’s not advisable. HMRC may view it as a single gift spread out, especially if it is clearly connected. It’s best to spread benefits across different days or events.
No — there’s no annual cap for employees (only the £50 per item rule applies). The £300 cap applies only to directors of close companies.
Yes, trivial benefits are a legitimate company expense and are deductible for Corporation Tax purposes when given to employees. There’s no specific restriction in HMRC guidance preventing this for directors, so it’s generally accepted that qualifying trivial benefits for directors are allowable too.
If the benefit exceeds £50, the whole amount becomes taxable, not just the excess. The company may need to report it and pay Class 1a National Insurance on the amount.
