Trivial Benefits: A Tax-Free Perk for Company Directors

Trivial Benefits: A Tax-Free Perk for Company Directors by Anwen Roderick

Running your own business comes with more than just responsibilities — there are a few lesser-known financial perks as well. One advantage is the ability for company directors to enjoy trivial benefits small, non-cash gifts that are completely tax-free when handled correctly.

In this post, we’ll explain what trivial benefits are, how directors can make the most of them, and the key rules to stay on the right side of HMRC.

What Is a Trivial Benefit?

A trivial benefit is a small perk or gift given to an employee (or director) by a company. Provided it meets certain criteria, it’s completely exempt from Income Tax, National Insurance, and reporting requirements.

For a trivial benefit to qualify, it must meet all the following conditions:

·      The cost must not exceed £50 per benefit, including VAT

·      It cannot be cash or a cash voucher

·      It must not be a reward for work or performance

·      It must not be part of the employee's or director’s contract

If even one of these conditions is not met, the benefit becomes taxable. But if they are all satisfied, it’s a free perk — with no need to report it to HMRC or include it in payroll.

Trivial Benefits for Company Directors: What’s the Limit?

While regular employees can receive unlimited trivial benefits (if each gift follows the rules), there is a specific restriction for directors of “close companies.”

For these directors, there’s an annual cap of £300 in trivial benefits.

Here’s what that looks like in practice:

Date	Gift Description	Cost
8th March	Birthday flowers	£35
21st June	Summer lunch voucher	£45
20th December	Festive wine hamper	£50

If each item is under £50 and the total doesn’t exceed £300 per tax year, the director can receive these gifts tax-free.

What to Avoid: Common Mistakes

To keep your trivial benefits legitimate — and to avoid a surprise tax bill — be careful not to fall into these traps:

• Don’t give cash or cash vouchers. Even £10 in cash is disqualified. Opt for non-cash vouchers e.g Amazon or Google play gift cards, or tangible gifts instead.

• Don’t exceed the £50 per item limit, even by a penny. If a gift costs £50.01, it’s no longer trivial and becomes fully taxable.

• Don’t use trivial benefits as disguised bonuses, anything that appears to reward work performance could invalidate the exemption.

• Don’t go over the £300 yearly cap for directors, if you do, the excess benefits will be subject to Income Tax and National Insurance.

Keep Records

Although you don’t need to report trivial benefits to HMRC, it’s a good idea to keep clear records. This protects you in the event of a tax investigation.

Your records should include:

• The date the benefit was given

• A description of the item or experience

• The cost (with receipts if possible)

• The recipient's name

• A simple spreadsheet or internal log will usually suffice

Final Thoughts: Small Perks, Big Compliance Win

Used properly, trivial benefits can be a smart way to offer yourself (and your employees) thoughtful, tax-free perks throughout the year. For company directors, staying under the £50-per-item and £300-per-year limits is key.

Need help creating a compliant director benefits plan or unsure how to apply the trivial benefits rule?

Contact us to help you stay compliant while making the most of the available perks.

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