The Ultimate Guide to Sending Employee Gifts in the UK

What Are Business Gifts in the UK?

Business gifts in the UK are items given by a company without expecting anything in return. These could be aimed at employees, customers, or suppliers. But HMRC treats gifts differently depending on who receives them.

Gifts to employees

• These are classed as benefits and may be taxable unless they qualify as trivial benefits (we explain this in detail later).

• Examples: a bottle of wine at Christmas, a birthday cake, or a thank-you voucher.

Gifts to customers or clients

• Treated separately by HMRC.

• You can’t usually deduct the cost of these for Corporation Tax purposes unless the gift:

  • costs under £50,

  • carries a clear advert for your business, and

  • isn’t food, drink, tobacco or vouchers.

VAT on corporate gifts

• You can claim back VAT on business gifts if the total per recipient stays under £50 in a 12-month period.

• If the £50 limit is exceeded, you may have to account for output VAT.

So, when it comes to business gifts in the UK, make sure you know:

• who the gift is for

• what the gift is

• how much it costs

This affects whether you can claim VAT and if there are any tax implications.

What Qualifies as a Trivial Benefit?

Trivial benefits, as defined by HMRC, are small, non-cash gifts that don’t count as taxable income for employees — provided they meet all the following conditions:

According to HMRC guidance (EIM21864), a benefit is trivial if:

• It cost £50 or less (including VAT)

• It’s not cash or a cash voucher

• It’s not a reward for work or performance

• It’s not part of the employee’s contract or a salary sacrifice arrangement

If the benefit fails even one of these tests, it doesn’t qualify as trivial and may be taxable.

✅ Examples of trivial benefits that usually qualify:

• A bottle of wine at Christmas or to mark a work anniversary

• A box of chocolates for a birthday

• A meal out or takeaway to celebrate a team milestone (as long as it’s not performance-related)

• A gift card for a shop (but only if it can’t be exchanged for cash)

❌ Examples of what wouldn’t qualify:

• A £60 bottle of champagne – it’s over the £50 limit

• A bonus voucher for hitting sales targets – it’s a reward for work

• Cash or anything that can be exchanged for cash

• A promised annual gift written into an employee’s contract

Understanding these rules is key when giving employee gifts in the UK. Following the trivial benefits HMRC criteria means you can offer small gestures of appreciation without triggering tax or National Insurance.

Corporate Gifts Under £50

Common Questions About Trivial Benefits

Understanding the rules around trivial benefits can help businesses avoid mistakes when giving staff gifts in the UK. Here are answers to some of the most common questions, based on HMRC’s guidance.

What qualifies as a trivial benefit?

A benefit is only considered trivial by HMRC if it meets all the following conditions:

• It cost £50 or less, including VAT

• It’s not cash or a cash voucher

• It’s not a reward for work or performance

• It’s not contractual

This is explained in detail in HMRC manual EIM21864.

Is £300 trivial benefits per director?

Yes – but with limits. For directors of close companies (broadly, small companies controlled by five or fewer shareholders), there’s an annual cap of £300 per tax year on trivial benefits.

• You can give multiple gifts, as long as each one is £50 or under

• Once the total exceeds £300, any further benefits are taxable

This rule is covered in HMRC manual EIM21869.

Are staff lunches trivial benefits?

Sometimes. A lunch may qualify if it’s:

• Occasional (e.g. a one-off team lunch to celebrate a success)

• Not part of a regular staff perk or subsidised arrangement

If lunch is provided regularly or forms part of an agreement, it’s unlikely to be considered trivial.

Can trivial benefits be backdated?

Not officially. There’s no formal way to backdate trivial benefits. However, if a gift was given and meets the criteria, you may still be able to account for it retrospectively, provided it hasn’t yet been reported or processed.

Following the trivial benefits HMRC rules helps ensure your gifts to employees remain tax-free – and hassle-free.

Tax Implications of Gifts to Employees

If your gift to an employee doesn’t meet HMRC’s trivial benefits rules, it may be treated as a taxable benefit-in-kind. This means both you and your employee could face extra tax or National Insurance (NI) liabilities.

When a gift doesn’t qualify as a trivial benefit

A gift will not count as a trivial benefit if:

• It costs more than £50 (including VAT)

• It’s a reward for performance (e.g. for hitting a target)

• It’s given as part of a contract

• It’s cash or a cash voucher

In these cases, the value of the gift is treated as employee income.

How to report and pay tax on non-trivial gifts

There are two main ways to deal with this:

• P11D form – the value of the gift is reported, and the employee pays tax on it

• PAYE Settlement Agreement (PSA) – the employer agrees to settle the tax and NICs on behalf of the employee

A PSA is often used for small gifts or staff events where the business wants to cover the full cost, including tax.

Impact on Corporation Tax

According to HMRC guidance BIM45065:

• You can usually deduct the cost of employee gifts (including those taxable as benefits) when working out your Corporation Tax.

Employer National Insurance

If a gift is taxable, you may also need to pay Class 1A National Insurance on its value. This adds to the overall cost, so it’s worth checking whether a gift qualifies as trivial before giving it.

Being aware of these gifts to employees tax implications helps keep things simple – and avoids any surprises down the line.

Can You Claim VAT on Employee or Business Gifts?

When it comes to VAT on corporate gifts, the rules are quite specific. You can reclaim VAT on business gifts, but only in certain situations.

Gifts under £50 per person per year

If you give gifts that cost £50 or less (excluding VAT) to the same person in a 12-month period, you can reclaim the VAT, provided the gift is:

• Given for business purposes, and

• Not resold by the recipient

This applies to both employee gifts and gifts to clients or customers.

Gifts over £50

Once the total value of gifts to the same person exceeds £50 in a 12-month period, HMRC treats the items as if they were sold. That means:

• VAT becomes payable on the full value, even if you gave them away

• You can’t reclaim VAT, unless the gift qualifies as either:

  • A free sample, or

  • An advertising item clearly marked with your branding

This is set out in VAT Notice 700/7 on Business Gifts.

Keeping track of how much you’re gifting per person helps you stay within the £50 VAT limit — and avoid unexpected charges.

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Best Practice Tips for Corporate Gifting in the UK

To stay compliant and make the most of your corporate gifting efforts, it’s worth following a few simple best practices.

1. Keep clear records

Always keep a note of:

• The value of each gift

• The name of the recipient

• The reason or occasion for the gift

This helps if HMRC ever asks for evidence or if you need to work out tax treatment later.

2. Stick to the trivial benefits rules

Where possible, keep employee gifts within the trivial benefit rules:

• £50 or less

• Not cash or a cash voucher

• Not a reward for work

• Not part of their contract

This avoids triggering benefit-in-kind tax or NICs.

3. Use branded or relevant items

For client gifts in particular, branded gifts or those that reflect your business may help qualify as a business gift under VAT rules.

4. Check HMRC guidance annually

Rules can change. Review the latest HMRC updates before planning your annual gifting to avoid any surprises.

Staying within the rules not only keeps you compliant—it also makes corporate gifting a more cost-effective way to show appreciation.

Key Takeaways for Employee Gifting

Giving staff a small token of appreciation is a great way to boost morale and show recognition. But it’s important to understand the rules to avoid unexpected tax or reporting issues.

• Trivial benefits can be given tax-free if they meet HMRC’s criteria – under £50, not cash, and not a reward for work.

• Directors of close companies have an annual cap of £300 on trivial benefits.

• Gifts outside the rules may need to be reported and taxed as a benefit-in-kind.

• VAT can be reclaimed on some business gifts, but there are limits.

It’s perfectly possible to be generous and stay compliant. Keep good records, check the rules, and when in doubt, refer to HMRC’s official guidance:

• Trivial Benefits – GOV.UK

• EIM21864 – Trivial Benefits: Conditions

• EIM21863 – Trivial Benefits Examples

• EIM21869 – Trivial Benefits and Close Company Directors
• CTM60060 – Definition of a Close Company

Give with care, and you’ll keep both your team and your accountant happy.