Trivial benefits and staff entertaining

Small gifts and the annual party. Exempt within specific limits, taxable outside them.

What it means

Trivial benefits are exempt where they cost no more than a set amount, are not cash or a cash voucher, are not a reward for work and are not contractual.

Why it matters

The annual function exemption covers staff events up to a set amount per head per year, and it is all-or-nothing: exceed it by a pound and the whole cost becomes taxable.

What it looks like in practice

The annual limit is cumulative across all events in the year, so a summer barbecue and a Christmas party share the allowance.\n\nDirectors of close companies have an annual cap on trivial benefits.

What to watch out for

Client entertaining is not deductible for corporation tax and the VAT is not recoverable, which is different from staff entertaining. Mixing the two on one invoice creates work.

Where to get proper advice

GOV.UK for the current rates and thresholds, which move most years. Your accountant before acting — this is exactly the kind of question a fee is for.