Trivial benefits are a simple way for company directors to receive small perks from their company without creating a tax charge.

Normally, when a company provides a benefit to a director or employee, it must be reported to HMRC and may trigger Income Tax and National Insurance. However, HMRC allows certain small, occasional benefits to be provided tax-free, provided specific conditions are met.

For directors of small companies, the total value of trivial benefits is limited to £300 per tax year, and each individual benefit must cost £50 or less. This limit applies per director, so if your company has two directors, each could receive up to £300 of trivial benefits per tax year.

In this guide we explain:

• what counts as a trivial benefit
• the rules you need to follow
• how directors commonly use the allowance in practice

If you’re the kind of person who enjoys reading HMRC manuals (we certainly don't judge), you can find their official guidance here.

What counts as a trivial benefit?

Normally, if a company provides a benefit to a director or employee, it is taxable. This means:

• the individual may need to pay Income Tax, and
• the company may need to report it to HMRC (usually via a P11D) and pay Employer’s National Insurance.

However, HMRC makes an exception for small benefits that meet the trivial benefit rules. If the conditions are met, the benefit:

• does not need to be reported to HMRC, and
• is not taxed on the director or the company.

For directors of small companies (known as close companies), the total value of trivial benefits is capped at £300 per tax year.

Note that this is based on the personal tax year (6 April to 5 April) rather than your company’s accounting year.

The rules:

For a benefit to qualify as trivial, all of the following must apply:

1. Each benefit must cost £50 or less:
This is a strict limit. If a benefit costs £50.01 or more, the entire amount becomes taxable. You can buy these vouchers on the same day, but they have to be separate transactions. 

2. It cannot be cash or a cash-equivalent payment:
Cash payments do not qualify. However, most vouchers and gift cards are allowed, provided they cannot be exchanged for cash.

3. It cannot be a reward for work or part of your employment contract:
Trivial benefits must be occasional gifts, not something you are contractually entitled to receive.

4. The benefit must be paid for directly by the company:
You can’t pay for it personally and then reimburse yourself, which is why it doesn’t appear in Mighty’s expense claim section.

How directors usually use this

A common approach is for the company to purchase gift vouchers or gift cards worth up to £50 each.

For example, a director might receive:

• 6 × £50 vouchers over the course of the tax year
• total value: £300

The company pays for the vouchers directly, and provided the rules above are followed, the benefit remains tax-free. 

Examples might include vouchers for retailers, restaurants, travel platforms, or similar. In practice, Amazon vouchers tend to be the most common, but the provider doesn’t matter as long as the £50 per benefit limit is respected.

How it’s treated for tax

When the rules are met:

• The director does not pay Income Tax on the benefit
• The company does not pay Employer’s National Insurance
• The benefit does not need to be reported on a P11D

The cost is normally treated as a deductible expense for corporation tax, as long as it has been paid for by the company.

If you’re unsure whether something qualifies as a trivial benefit, feel free to ask your dedicated accountant or contact us at support@mightyaccounting.com.