Trivial benefits: the £50 rule and the £300 director cap
Last updated: October 20, 2026
By the Glasscubes editorial team
Short answer: a benefit is tax-free as a trivial benefit if it is not cash or a cash voucher, costs no more than £50, is not provided under salary sacrifice or a contractual obligation, and is not given in recognition of particular services. Directors and other office-holders of close companies, and their families, are also capped at £300 in total per tax year. The exemption is in ITEPA 2003 ss323A–323C and has applied since 6 April 2016.
The conditions
| Condition | The test |
|---|---|
| A — not cash | The benefit is not cash or a cash voucher. |
| B — £50 or less | The cost of providing the benefit does not exceed £50. Where a group of employees receive it together, an average cost per head can be used. |
| C — not contractual | It is not provided under salary sacrifice or any other contractual obligation. |
| D — not a reward for work | It is not provided in recognition of particular services performed by the employee in the course of the employment. |
| E — close-company cap | If the employer is a close company and the employee is a director or other office-holder, the cost must not take them over their £300 annual exempt amount. |
How the £300 cap works
- The cap is £300 of total cost per tax year, per individual, per employer.
- Benefits count when they are provided, not when they are paid for.
- If a benefit would take the total over £300, none of that benefit is exempt. Benefits already provided earlier in the year stay exempt.
- Benefits given to the director’s family or household — spouse or civil partner, children and their spouses, parents, domestic staff, dependants and guests — count towards the director’s cap.
Watch out for
- A £50 gift card that can be exchanged for cash is a cash voucher and fails Condition A.
- A gift for hitting a target or finishing a project fails Condition D, however small.
- £50 is a hard limit on cost, including VAT. A £51 benefit is taxable in full, not just the excess.
Sources
- ITEPA 2003 s323A — trivial benefits provided by employers
- ITEPA 2003 s323B — the annual exempt amount
- HMRC Employment Income Manual EIM21864 — trivial benefits
- HMRC Employment Income Manual EIM21869 — the close-company cap
Checked against the sources above on 16 October 2026. General information, not advice on a particular employer’s position.
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