Running your own limited company usually means keeping a close eye on costs and tax. But not every expense has to feel serious or complicated. HMRC allows companies to provide small perks, known as trivial benefits, without creating extra tax or reporting as long as the rules are followed.
When used properly, trivial benefits are a simple way for directors to enjoy modest treats through their company, without unexpected tax bills later.
What HMRC Means by a “Trivial Benefit”
A trivial benefit is a small, occasional perk provided by a company that HMRC considers too minor to tax. These are not rewards for work done, bonuses, or anything promised in advance. They’re genuinely just small gestures.
The key point is that the intention and structure matter just as much as the cost.
The Four Conditions That Must Always Be Met
For a benefit to be treated as trivial (and therefore tax-free), all of the following must apply:
- It costs £50 or less per person, per benefit (including VAT)
Go even a penny over, and the whole amount becomes taxable. - It isn’t cash or cash-like
Cash, bank transfers, or vouchers that can be exchanged or transferred for cash do not qualify. - It isn’t linked to work or performance
If it’s a thank-you for hitting a target or completing a project, it’s no longer trivial. - It isn’t something the person is entitled to
Anything written into a contract or expected on a regular basis will fail this test.
Miss just one of these, and HMRC will treat it as a taxable benefit.
Special Rules for Directors
For directors of close companies (which includes most owner-managed and one-person limited companies), there’s an extra limit to be aware of.
- Directors can receive up to £300 per tax year in trivial benefits
- This is a total cap — not £300 per benefit
- Once the £300 limit is exceeded, the excess becomes taxable
Employees who are not directors do not have this annual cap, provided each individual benefit still meets the £50 rule.
Examples That Usually Work Well
Trivial benefits don’t need to be creative or extravagant. Common, sensible examples include:
- A birthday or Christmas gift under £50
- A bottle of wine or flowers to mark a personal occasion
- A non-cash gift voucher that is non-transferable for cash
- An occasional meal or treat bought without expectation or obligation
The word occasional is important. Benefits given too frequently can start to look like part of someone’s pay.
What Often Catches People Out
Some of the most common mistakes we see are:
- Assuming gift cards always qualify — only vouchers that are non-transferable for cash usually count
- Treating regular monthly perks as trivial
- Going slightly over £50 and assuming it’s “close enough”
- Forgetting the £300 annual cap for directors
- Calling something “trivial” when it’s actually a reward for work
These are exactly the situations HMRC tends to challenge.
Do You Need to Keep Records?
Yes, but it doesn’t need to be complicated.
A simple note of:
- what was provided
- who received it
- when it was given
- how much it cost
is usually enough. This makes it easy to show that the rules were followed if HMRC ever asks.
Why Trivial Benefits Are Worth Using
Trivial benefits aren’t about pushing boundaries or finding loopholes. They’re about using the rules properly.
Handled correctly, they:
- allow small perks without tax
- avoid P11Ds and payroll reporting
- keep things simple and compliant
- add a bit of flexibility to how you take value from your company
They won’t replace salary or dividends but they’re a useful extra when used sensibly.
PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.
We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.
Our fixed fee monthly accounting packages all include a FreeAgent subscription as standard and unlimited support from your allocated accountant.
To find out how we can help you please get in touch now.
