Trivial benefits are a great way to reward staff and directors without adding tax or National Insurance to the bill. In this episode of the I Hate Numbers podcast, we explain what trivial benefits are, the rules that must be followed, and how they can be used effectively in 2025. This is about giving without the tax sting.
Main Topics & Discussion
What Are Trivial Benefits?
- Small gifts or perks given to employees that do not count as taxable income.
- Completely exempt from tax and National Insurance if all conditions are met.
- Can be given to both employees and directors, but with limits for directors.
Key Conditions for Exemption
- Cost must not exceed £50 per benefit.
- Must not be cash or a cash voucher.
- Must not be a reward for work or performance.
- Must not be part of contractual entitlement.
Annual Limit for Directors
- Directors of close companies (and their family members) have a total annual cap of £300 in trivial benefits.
- This means up to six separate £50 gifts per tax year.
Examples of Trivial Benefits
- Flowers for a birthday.
- Gift card (non-cash) to celebrate a personal event.
- Meal out not linked to business performance.
- Small seasonal gifts like chocolates or wine.
Common Mistakes to Avoid
- Exceeding the £50 limit – the whole benefit becomes taxable if this happens.
- Giving cash or cash vouchers – these are always taxable.
- Linking the benefit to performance or contractual terms.
Final Thoughts
Trivial benefits are a simple, tax-efficient way to build goodwill with staff and directors. Staying within the rules ensures the gift remains tax-free, helping businesses to be generous without unwanted costs. Planning these benefits throughout the year can also make them more meaningful and spread the goodwill.
Links Mentioned in This Episode
Episode Timecodes
- [00:00:00] – Introduction to trivial benefits
- [00:01:12] – What trivial benefits are
- [00:02:08] – Rules for exemption
- [00:03:30] – Directors’ annual limits
- [00:04:22] – Examples
- [00:05:16] – Common mistakes
- [00:06:20] – Final advice
Host & Show Info
Host Name: Mahmood Reza
About the Host: Mahmood is an accountant, tax expert, and founder of I Hate Numbers. With over 30 years of experience, he helps businesses make sense of tax and finances so they can grow with confidence.
Stay tax smart all year...
