Staff expenses and benefits – your 2025/26 guide  

What are HMRC trivial benefits in 2025/26?

Trivial benefits are small, tax-free perks you can give to your staff, provided all of the following apply:

• The benefit costs £50 or less (including VAT)
• It isn’t cash or a cash voucher
• It isn’t a reward for work or performance
• It isn’t included in the employee’s contract

You can give as many trivial benefits as you like during the year and neither you nor the employee will pay tax or NIC.

Example: You could give several £50 gift vouchers over the course of the year, so long as they’re separate and not linked to performance.

VAT: VAT can be claimed if you have a VAT receipt. The £50 limit is inclusive of VAT.

Speak to us: Not sure if a perk qualifies as a trivial benefit? Contact us before you buy, we’ll help you stay within the rules.

Can directors receive trivial benefits?

Yes but there are limits. The maximum a director (or their close relatives) can receive is £300 per tax year (6 April – 5 April). Each benefit must still be £50 or less to qualify.

VAT: VAT can be claimed if you have a VAT receipt, but the £50 limit is inclusive of VAT.

Are staff meals tax-free?

Not always. Meals are only tax-free in certain circumstances:

• Training days: Lunch provided during training is tax-free if it’s available to all staff
• Social meals: General social meals are taxable unless they form part of an annual staff function

VAT: VAT can be claimed with a valid receipt.

Are staff parties and social events exempt?

Yes, if they meet HMRC’s criteria:

• The event must be open to all staff
• It must be annual (e.g., Christmas party, summer BBQ)
• It must cost £150 or less per person (including VAT)

If the cost exceeds £150 per person, even by £1, the whole event becomes taxable. Likewise, one-off events or those limited to selected employees will be a taxable benefit.

You can hold multiple events but the combined cost of all the events must be no more than £150 per person.

VAT: VAT can be claimed if you have a receipt. The £150 limit is inclusive of VAT.

Can you buy dinner for staff working late?

Yes, provided:

• The meal is for business reasons, not a social event
• It is available to all employees working late under the same circumstances

VAT: VAT can be claimed with a receipt.

Are gifts for birthdays, retirements or long service tax-free?

Cash gifts are always taxable. Non-cash gifts may be tax-free if they fall under:

• Trivial benefits (up to £50 per gift, not linked to performance)
• Long service awards if:
  • The employee has 20+ years’ service
  • They haven’t received an award in the last 10 years
  • The gift is worth less than £50 per year of service

For example, 25 years of service allows a non-cash gift worth up to £1,250 tax-free

VAT: VAT can be claimed if you have a VAT receipt.

Can you reimburse business travel costs tax-free?

Yes, if employees use their own car for business travel, you can reimburse them tax-free using HMRC’s Approved Mileage Allowance Payments (AMAPs):

• 45p per mile for the first 10,000 miles in the tax year
• 25p per mile thereafter

You must keep accurate records showing the dates, destinations, mileage, and reason for each trip.

VAT: You can claim VAT on the fuel portion if you keep matching fuel receipts that cover the mileage claimed.

Important: These AMAP rates apply only when employees use their own vehicle for business journeys.  If an employee uses a company car, HMRC’s Advisory Fuel Rates (AFRs) apply. Read rates here. 

What are HMRC’s tax-free subsistence rates?

For qualifying business journeys, you can reimburse meals tax-free if:

1. The journey is business-related
2. You have a checking system in place
3. You use HMRC’s benchmark rates or have approval for higher rates

HMRC’s benchmark subsistence rates are:

• £5 for travel of 5+ hours (+£10 supplement if travelling after 8pm)
• £10 for travel of 10+ hours (+£10 supplement if travelling after 8pm)
• £25 for travel of 15+ hours (and ongoing after 8pm)

Receipts must still be kept.

Can you claim incidental overnight expenses?

Yes, when an employee is required to stay away overnight for business:

• Up to £5 per night for UK stays
• Up to £10 per night for overseas stays

Allowable costs include laundry, newspapers, and personal calls home. If you exceed these limits, the whole amount becomes taxable (unless employees repay the excess).

VAT: VAT can be claimed with receipts.

Are mobile phones provided to directors tax-free?

Yes if the phone contract is in the company’s name, one mobile phone per director (or employee) can be provided completely tax-free, including the cost of calls and data.

Can you claim for working from home costs?

Possibly but the rules are more specific than many realise.

You can only claim tax-free reimbursements for homeworking costs if:

• There is a formal homeworking arrangement (it must be required by the company, not simply a personal choice), and
• The payments cover additional household expenses incurred because of working from home (such as extra heating, electricity, or broadband usage).

In this case, the company can pay a flat rate allowance of £6 per week tax-free, without needing evidence of the actual costs.

If you want to reimburse actual additional costs above £6 per week, you must:

• Be able to prove the costs are directly related to business use, and
• Keep detailed evidence and calculations to justify the amount.

Important: These rules apply to employees required to work from home. If homeworking is voluntary or occasional, payments may become taxable.

Can you claim for eye tests or glasses?

Yes if an employee needs an eye test because they use a computer screen for work, the company can pay for the test tax-free. If glasses are required solely for screen use, the company can pay for those too. General-use glasses are not covered.

Can the company pay for training and subscriptions?

Yes. Role-related training, professional development courses, and HMRC-approved professional subscriptions can all be paid for by the company without creating a benefit in kind.