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Trivial benefits: the £50 perk rule for companies

Reviewed by Lee Jones, Founder · Updated 17 July 2026
The short answer

Yes, your company really can give you and your staff small perks with no tax to pay and nothing to report to HMRC. Each perk has to pass four tests: it cost £50 or less, it is not cash or a voucher you can swap for cash, it is not a reward for anyone's work, and nobody's contract promises it.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Trivial benefits on gov.uk. Always rely on that over our summary.

What are the four tests a perk has to pass?

HMRC calls these small perks "trivial benefits". A perk counts as trivial, meaning no tax and no paperwork, only if all four of these are true:

  1. It cost the company £50 or less. That is the full cost of providing it, per person.
  2. It is not cash, and not a voucher you can swap for cash. Handing someone a £20 note is never trivial. A shop gift card that cannot be exchanged for cash can count, as long as it passes the other tests too.
  3. It is not a reward for work or performance. A thank-you for hitting a sales target is pay wearing a costume, and HMRC taxes it like pay.
  4. It is not something the contract promises. If an employment contract says everyone gets a monthly treat, that treat is part of the deal, not a trivial benefit.

Real-life examples make it easier:

  • Birthday flowers for £30: passes all four tests. Tax free, nothing to report.
  • A £60 Christmas hamper: fails test one. It does not just lose the £10 over the limit; the whole hamper is taxed as a normal perk.
  • A £40 gift for closing a big deal: fails test three, because it rewards work. Taxed as normal, even though it cost under £50.

One more trap: if someone gives up part of their salary in exchange for the perk, the tax break disappears and the perk has to be reported to HMRC. Keep perks as genuine extras, not swaps.

I am a director. What is the £300 cap?

If your company is run by five or fewer shareholders, which covers most small limited companies, HMRC calls it a "close" company, and its directors get a yearly ceiling: you cannot receive more than £300 of trivial benefits in a tax year (6 April to 5 April).

In practice that is six £50 perks a year. A £50 treat every month would come to £600, so the perks past the £300 mark would be taxed as normal. Staff who are not directors have no yearly cap; each perk just has to pass the four tests.

Is the Christmas party a trivial benefit?

No, and this is where people get muddled. The annual staff party runs under a completely separate rule with its own limit: up to £150 per head per year, tax free, as long as the event is an annual one, like a Christmas party or summer barbecue, and it is open to all your employees.

Two things to watch. First, the £150 includes VAT, plus any transport or overnight stay the company pays for so people can attend. Second, it is all or nothing: if the cost per head comes to £151, the whole amount becomes taxable for the people who went, not just the £1 over. If you hold more than one annual do, the events are covered as long as their combined cost per head stays within the £150.

So the £50 rule is for small perks through the year, and the £150 rule is for the annual party. They are different pots, and using one does not use up the other.

How do these show up in the company's tax return?

Good news: looking after your staff is a normal cost of running the business, so a staff party within the rules, and small staff perks, are normally allowable costs that reduce the profit your Corporation Tax is worked out on, provided they are genuinely for your team and not really a way of entertaining customers. Client entertaining is a different story, and our guide on food, drink and entertaining walks through it.

Common questions

What counts as a trivial benefit?

A perk that passes all four tests: it cost the company £50 or less, it is not cash or a voucher you can swap for cash, it is not a reward for work or performance, and it is not something the contract promises. Pass all four and there is no tax and no paperwork.

What happens if a perk costs more than £50?

It fails the first test. A £60 Christmas hamper does not just lose the £10 over the limit; the whole hamper is taxed as a normal perk.

How many trivial benefits can a director have?

If your company is a close company, run by five or fewer shareholders, its directors cannot receive more than £300 of trivial benefits in a tax year. In practice that is six £50 perks a year. Staff who are not directors have no yearly cap.

Is the Christmas party covered by the £50 rule?

No. The annual staff party runs under a completely separate rule with its own limit: up to £150 per head per year, tax free, as long as the event is annual and open to all your employees. They are different pots, and using one does not use up the other.

Want the perks and the party handled without the jargon?

SimpleReturns files your company's accounts and tax return from your bank statement and a few plain-English questions, and sorts which staff costs reduce the company's tax along the way. It is free to start, no card needed, and filing costs £99 flat for both filings.

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And if you want to set up salary-swap perk schemes or anything beyond the simple rules above, that is genuinely accountant territory, and we will say so rather than pretend otherwise.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.