The £50 trivial benefits rule, and what happens above it
A gift to an employee is free of tax and National Insurance when it costs £50 or less, is not cash, is not a reward for their work and is not in their contract. Above £50, or for a thank-you for hitting a target, most employers settle the tax themselves through a PAYE Settlement Agreement. Each case below links to the HMRC page it comes from.
How HMRC taxes gifts to employees
Trivial benefits. Under section 323A of ITEPA 2003 a benefit is exempt when it costs £50 or less to provide, is not cash or a cash voucher, is not a reward for work or performance and is not in the employee’s contract. The £50 includes VAT. It is a limit, not an allowance: HMRC's manual gives the example of a £10 gift card topped up seven times, which is one £80 benefit and taxable in full. A gift card that can only be spent on goods or services can qualify; one that can be exchanged for cash is earnings, taxed through payroll. Directors of close companies and their households are capped at £300 of trivial benefits per tax year.
The reward catch, and long service. A thank-you for closing a deal or finishing a project is a reward for work, so it is not a trivial benefit at any value. Long service has its own exemption under section 323: a non-cash award for 20 years or more of service, worth up to £50 per year of service, with no other long service award in the previous 10 years. Unlike trivial benefits, only the part above the limit is taxable.
Above the limits. Taxable gifts are either reported on a P11D, with Class 1A National Insurance at 15% in 2026 to 2027, or settled by the employer under a PAYE Settlement Agreement, which HMRC allows for benefits that are minor, irregular or impracticable to value, such as small gifts, vouchers and long service awards. The employer applies by 5 July after the first tax year it covers, the agreement then rolls on, and the grossed-up tax plus Class 1B National Insurance at 15% is paid by 22 October. Anything in a PSA is not payrolled and does not go on a P11D.
Records, and what changes in 2027 and 2028. HMRC expects records of every benefit for three years from the end of the tax year; P11Ds are due by 6 July. From 6 April 2027 cars, vans, fuel and medical benefits must be reported through payroll in real time, and most other benefits in kind follow from 6 April 2028, with a one-year easement on penalties. Budget 2026 changed none of the figures on this page.
This is general information as of the 2026 to 2027 tax year, not tax advice. Your payroll provider or accountant decides how each gift is treated.
Three gifts, three payroll treatments
The same employee, three occasions, each handled differently.
A £40 birthday gift
Not cash, not for performance, not in the contract and under £50: a trivial benefit. Nothing to report. Keep the date, the cost and the recipient on file for three years.
A £120 thank-you for a closed deal
A reward for work, so not trivial at any value. Most employers put it in their PAYE Settlement Agreement: income tax grossed up at the employee's rate plus Class 1B National Insurance at 15%, paid once a year, and the employee sees no deduction. The alternative is a P11D entry with Class 1A.
A 20-year award
A non-cash award of up to £1,000 (20 years at £50) is exempt if there was no long service award in the previous 10 years. At £1,200, only the £200 above the limit is taxable.
What Mojo Gift gives UK payroll
The record the rule needs, generated when the gift goes out.
Cost, date and recipient per gift
Every Mojo Moment is logged with recipient, value, occasion and delivery date, and the whole year exports in one file for the PSA calculation or the P11D.
Non-cash by design
The recipient chooses an experience or a product, never cash, and the amount is never shown to them. The gift is never a cash voucher.
Values set to the rule at setup
Occasion values are agreed with payroll in mind: birthdays and welcomes at or under £50, performance gifts flagged for the PSA, 20-year awards planned against the £50 per year line.
One programme, 190 countries
Colleagues outside the UK get the same programme, with the record their own country's payroll needs.
Built for the finance question
A programme that answers the payroll query before it is asked.
A record payroll can use
Values that respect the thresholds
No expiry
A human concierge
UK employee gift tax, answered
Are Christmas gifts to employees tax free in the UK?
A Christmas gift is a trivial benefit when it costs £50 or less including VAT, is not cash or a cash voucher, is not a reward for work and is not in the contract. A £60 hamper fails the cost condition and the whole £60 is taxable, not the £10 above the line. The annual party has a separate £150 per head exemption.
Is a £50 gift card a trivial benefit?
It can be, if it is redeemable only for goods or services and the cost to you, VAT included, is £50 or less. A gift card that can be exchanged for cash is treated as earnings and goes through payroll with PAYE and Class 1 National Insurance. Topping up the same card several times counts as one benefit.
Is there an annual cap on trivial benefits?
Not for employees: each gift is judged on its own against the four conditions. Directors of close companies, and members of their family or household, are limited to £300 of trivial benefits in a tax year.
When do we need a PAYE Settlement Agreement?
When you give taxable gifts that are minor, irregular or impracticable to value and you want to pay the tax rather than put it on the employee's P11D. You apply by 5 July following the first tax year it covers, the agreement then rolls on, you declare the values each year and pay the grossed-up tax plus Class 1B National Insurance at 15% by 22 October. Cash, bonuses and round-sum allowances cannot go in a PSA.
What changes when benefits are payrolled in 2027?
From 6 April 2027 cars, vans, fuel and medical benefits must be reported through payroll in real time; most other benefits in kind, which would include taxable gifts outside a PSA, follow from 6 April 2028, with a one-year easement on penalties for non-deliberate errors. PAYE Settlement Agreements continue.
What does Mojo Gift cost, and does it decide whether a gift is taxable?
€25 per Mojo Moment per year, from 50 Moments (€1,250 a year), £25 for UK-billed programmes, invoiced in EUR, GBP or USD; gift value is funded on top at face value. One-off campaigns are €6,250 per 250 Moments. Mojo Gift does not decide the tax treatment: each gift carries its recipient, value, occasion, country and date, and your payroll provider or accountant applies the rule.
Set the gift values before the first one goes out
Book a 30-minute call. We map your occasions to the £50 and 20-year lines with payroll in mind and show the record each gift carries.
Book a 30-minute call