Staff Entertainment, gifts and trivial benefits
Overview 📘
Staff entertainment and gifts can create taxable benefits for employees. However, in some cases they may fall within the trivial benefits exemption, meaning no tax or NICs apply. Employers must carefully apply the rules to avoid unexpected charges.
✅ Staff Entertainment
- Food and drink provided outside the normal course of business is a taxable benefit.
- The value must be reported on a P11D.
- Employees pay income tax (via a tax code adjustment).
- Employers pay NICs on the total value.
💡 If the event qualifies as a trivial benefit (see below), it is neither reportable nor taxable.
🎁 Gifts to Employees
- Cash gifts (such as Christmas or birthday bonuses) are taxable.
- Vouchers that can be spent in shops are taxable, unless they meet the trivial benefit rules.
- Seasonal presents (turkey, wine, chocolates) are not taxable if they are reasonable in cost and within trivial benefit rules.
🔍 Trivial Benefits – Conditions
Benefits can be exempt if they meet all of the following:
- The benefit costs £50 or less per person.
- It is not a reward for services or contractual.
- It is not cash or a voucher exchangeable for cash.
Multiple £50 gifts are allowed, but if the pattern of gifting suggests reward for services, the exemption no longer applies.
For directors and their families, there is an annual limit of £300 in trivial benefits.
📊 Practical Examples
- Trivial: A team meal costing £48 per person – exempt under trivial benefit rules as < £50.
- Non-Exempt: A gift card topped up eight times at £10 each (£80 total) in the tax year – this would be taxable.
- Director Example: Six £50 vouchers in a year (£300 total) – this is not taxable as it's within the annual limit for directors.
💡 When the Rules Do Not Apply
- Bulk gifts: If some gifts exceed £50, only the lower-cost items are exempt.
- Recurring perks: Ongoing benefits (e.g. gym memberships) may breach limits if the annual total exceeds £50 or is deemed a reward.
Trivial benefits are a cost-effective way to show appreciation, but employers should monitor costs carefully and avoid providing benefits tied to performance or contractual obligations.