What is the trivial benefits exemption?
Answered 11 March 2026
Here is a comprehensive explanation of the trivial benefits exemption:
The Trivial Benefits Exemption
What the law says
The trivial benefits exemption is a statutory income tax exemption introduced by section 323A ITEPA 2003, effective from 6 April 2016 (tax year 2016-17 onwards).
No liability to income tax arises in respect of a benefit provided by (or on behalf of) an employer to an employee or a member of the employee's family or household, provided the following conditions are all met:
| Condition | Requirement |
|---|---|
| A | The benefit is not cash or a cash voucher (within the meaning of s.75 ITEPA) |
| B | The benefit cost does not exceed £50 (or the average cost per person where it is impracticable to calculate individual costs) |
| C | The employee is not contractually entitled to the benefit (including under salary sacrifice arrangements) |
| D | The benefit is not provided in recognition of particular services performed by the employee (or in anticipation of such services) |
Additional condition for close companies (Condition E): Where the employer is a close company and the employee is a director/office-holder (or a member of their family or household), an additional annual cap of £300 applies under section 323B ITEPA 2003 — the "annual exempt amount".
The Treasury has the power to increase the £50 cost limit (s.323A(4)) and the £300 annual exempt amount (s.323B(2)) by order under section 716 ITEPA 2003.
Importantly, the exemption remains available even where a benefit is provided pursuant to optional remuneration arrangements — s.323A is listed as a "special case exemption" under s.228A ITEPA, meaning the general exclusion for salary sacrifice/optional remuneration does not override it.
HMRC guidance / practice
The four qualifying conditions in practice:
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Not cash or a cash voucher — Non-cash gift vouchers (e.g. a supermarket gift card) can qualify. However, where an employer reimburses an employee for an expense, that reimbursement is a cash payment and cannot be covered by s.323A.
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Cost does not exceed £50 — If a benefit is provided to a group and it is impracticable to calculate the individual cost, the average cost per person is used.
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No contractual entitlement — Benefits provided under salary sacrifice arrangements do not qualify.
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Not in recognition of services — Typical qualifying benefits are those provided for staff welfare purposes, such as a bunch of flowers on the birth of a child or a bereavement. Benefits such as performance-related gift vouchers, long service awards, or team-building events as a thank-you for good results will not qualify.
The £300 annual cap for close company directors:
- Where a close company provides trivial benefits to a director/office-holder, the total exempt amount across the tax year is capped at £300.
- Once the cap is exceeded, the benefit that causes the excess is fully taxable (not just the excess amount).
- Where a trivial benefit is provided to a family/household member of a director, the cost counts towards the director's £300 cap (unless that family member is themselves an employee/office-holder of the same company, in which case they have their own £300 cap).
Interaction with other exemptions:
- Where a benefit is covered by both the trivial benefits exemption and another exemption, the outcome most favourable to the employee applies.
- If an existing exemption covers only part of a benefit, the excess is not then covered by the trivial benefits exemption. For example, a Christmas party costing £180 per head is not exempt under the annual parties exemption (£150 limit) and is also not exempt as a trivial benefit (exceeds £50).
Third-party provision: The exemption also applies where the trivial benefit is provided on behalf of the employer by a third party (e.g. through a group management services company), provided the cost is ultimately borne by the employer.
NICs: A matching Class 1 NICs disregard was introduced from 28 November 2016 to mirror the income tax treatment.
Citation sources
A statutory exemption for trivial benefits in kind (section 323A ITEPA2003) was introduced for income tax purposes from 6 April 2016 (see EIM21864 to EIM21871). Under this exemption, if an employer provides a benefit to its employees, the benefit is exempt from tax as employment income if all of the following conditions are satisfied. the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to
Note: this guidance has effect for benefits provided from 6 April 2016 onwards. For guidance on HMRC’s approach to trivial benefits for tax years 2015 to 2016 and earlier, see EIM21860. Where a benefit is covered both by the trivial benefits exemption and also by another exemption, in applying the trivial benefits exemption, you should apply the outcome that is most favourable to the employee. Example S Employer S provides its employees with two annual functions at Christmas and in the summer. T
Part 13 Supplementary provisions Alteration of amounts Alteration of amounts by Treasury order 716 1 The Treasury may by order increase or further increase the sums of money specified in any of the following provisions. 2 They are— a section 179(2)(a) (limit on exception for advances for necessary expenses), b section 241(3)(a) and (b) (incidental overnight expenses: overall exemption limit), c section 264(2) and (3) (annual parties and functions), d section 287(1) (limit on exemption under Chap
Note: this guidance has effect for benefits provided from 6 April 2016 onwards. For guidance on HMRC’s approach to trivial benefits for tax years 2015 to 2016 and earlier, see EIM21860. The guidance at EIM21864 sets out the qualifying conditions that determine whether or not a benefit provided to an employee is exempt from tax as a trivial benefit. Where the employer is a close company and the benefit is provided to an individual who is a director or other office holder of the company (or a memb
ceeds the annual exempt amount, none of the benefit that exceeds the cap is exempt (in other words, the total cost of the benefit in question – see Example K). However, the tax treatment of any earlier benefits where the total cost did not exceed the annual exempt amount is not affected. Where more than one trivial benefit is provided on the same day and the order in which they are provided determines whether the annual exempt amount is exceeded, apply the order that is most favourable to the in
Note: this guidance has effect for benefits provided from 6 April 2016 onwards. For guidance on HMRC’s approach to trivial benefits for tax years 2015 to 2016 and earlier, see EIM21860. The guidance at EIM21864 sets out the qualifying conditions that determine whether or not a benefit provided to an employee is exempt from tax as a trivial benefit. One of the conditions that has to be satisfied before the trivial benefit exemption can apply is that the benefit is not provided in recognition of p
Note: this guidance has effect for benefits provided from 6 April 2016 onwards. For guidance on HMRC’s approach to trivial benefits for tax years 2015 to 2016 and earlier, see EIM21860. Section 323A ITEPA 2003 sets out a statutory exemption for trivial benefits. Under this exemption, if an employer provides a benefit to its employees, the benefit is exempt from tax as employment income if all the following conditions are satisfied: the cost of providing the benefit does not exceed £50 (or the av
Note: this guidance has effect for benefits provided from 6 April 2016 onwards. For guidance on HMRC’s approach to trivial benefits for tax years 2015 to 2016 and earlier, see EIM21860. The guidance at EIM21864 sets out the qualifying conditions that determine whether or not a benefit provided to an employee is exempt from tax as a trivial benefit. One of the conditions that has to be satisfied before the trivial benefits exemption can apply is that the benefit is not cash or a cash voucher. How