UK Budget 2026 Leaves the £50 Trivial Benefits Limit Frozen: What It Means for Employee Gift Cards
The UK Budget on October 28 changed tax on property, savings and banks. It did not change the trivial benefits rules. A gift card, hamper or bunch of flowers still has to cost £50 or less to be tax-free, and directors of close companies are still capped at £300 a year. The limit has not moved since 2016, even though tax advisers asked for £70. For companies with UK staff, this year's holiday gifts work under the same rules as last year.
What the £50 rule covers, and what it does not
HMRC's guidance sets four conditions for a tax-free trivial benefit. The benefit must cost £50 or less to provide. It cannot be cash or a cash voucher. It cannot be a reward for work or performance. It cannot be part of the employee's contract. If a benefit fails any of these, the employer pays tax on it. Directors of a close company (a limited company run by five or fewer shareholders) also cannot receive more than £300 of trivial benefits in a tax year.
Two of these conditions matter most for gift cards. First, the £50 is all or nothing: a £55 gift card is not £50 tax-free plus £5 taxable. It is not a trivial benefit at all. Second, the exemption covers goodwill gifts, like a birthday, Christmas or a bereavement. It does not cover recognition. A gift card for hitting a target or finishing a project is a reward for work, so it is taxable whatever it costs. Our guide to UK trivial benefits and gift cards explains which cards count as cash vouchers and what settling the tax through a PAYE Settlement Agreement can cost.
What tax advisers asked for, and what the Budget did
| Item | Rule today | ATT asked for (Sept 8, 2026) | Budget, Oct 28, 2026 |
|---|---|---|---|
| Limit per benefit | £50 | £70 | No change |
| Yearly cap, close-company directors | £300 | £425 | No change |
| Employee buys the gift and is reimbursed | Taxable (HMRC treats the repayment as cash) | Relief, if the gift would have qualified had the employer paid directly | No change |
The ATT based the £70 and £425 figures on the Bank of England inflation calculator. On those numbers, £50 today buys roughly what £36 did in 2016 (our arithmetic: £50 × 50 ÷ 70). In practice, a gift that was comfortably inside the limit when the rule began may now need a smaller budget, or a cheaper item, to stay tax-free.
“The current limit has remained at the same level since the legislation was first introduced in 2016, and no longer covers many types of expenditure originally intended.”
— Association of Taxation Technicians, Budget 2026 representation on trivial benefits (September 8, 2026)
The dates UK payroll teams should note
- October 28, 2026: If an employer pays an employee's Immigration Skills Charge or Certificate of Sponsorship fee, it is no longer a taxable benefit in kind. This applies to payments made on or after this date.
- December 2026: Holiday gifts. The £50 and £300 limits apply as before.
- April 1, 2027: The National Living Wage rises to £13.21 an hour. The National Minimum Wage rises to £11.27 for ages 18 to 20 and to £8.31 for ages 16 to 17 and eligible apprentices.
- April 6, 2027: Company cars, vans, fuel and medical benefits must be payrolled. The tax-free mileage rate stays at 55p for the first 10,000 business miles, and the rate above 10,000 miles rises to 35p.
- April 6, 2028: The remaining benefits in kind move to mandatory payrolling. The £2,500 Self Assessment threshold for employment expense claims is removed, and HMRC's benchmark scale rates for business subsistence are updated.
The Budget's own costings table describes the payrolling timetable as a delay from the original start date of 6 April 2026. BKL's analysis of the Budget, published the same day, gives the same 2027 and 2028 dates. It adds that Class 1A National Insurance on payrolled benefits is expected to move to in-year reporting and payment, which would bring the cash cost forward from the current July 22 deadline.
What it means for UK reward budgets
- Keep holiday gifts at or below £50 if you want them tax-free. For example, a company sending a £45 gift card to each of 80 UK employees spends £3,600, and none of it is taxable if every other condition is met. Raise each card to £55 and the full £4,400 becomes a taxable benefit (our example).
- Plan recognition awards as taxable from the start. Spot awards and performance rewards never qualify as trivial benefits. Budget for the tax, or for settling it on employees' behalf, alongside the award. The employee recognition budget calculator helps split an annual budget into per-award amounts.
- Get ready for payrolling in 2028. Most taxable non-cash rewards are likely to be among the remaining benefits that move to payroll from April 2028. You will need clean records of who received what, and when.
- Teams in several countries need several rulebooks. The UK limit is per benefit. Other countries use yearly allowances or none at all. Rewordin's global rewards catalogue names the exact country each card works in, and our guide to rewarding remote teams across countries compares the tax rules.
For US payroll, see our news on the 2027 Social Security wage base. For the budgeting method, see how to build an employee rewards budget, and for nearby rules, tax-free employee gifts in Ireland.
Sources
- HM Treasury, “Budget 2026” (October 28, 2026), the primary source. Headline tax-rate commitment, National Living Wage and minimum wage rates, mileage rates, the payrolling timetable in Table 6.1, the Immigration Skills Charge change, the Self Assessment expenses threshold and the scale-rate review. The document does not mention trivial benefits. gov.uk
- GOV.UK / HMRC, “Expenses and benefits: trivial benefits” (accessed October 30, 2026). The four conditions, the £50 limit and the £300 cap for close-company directors. gov.uk
- Association of Taxation Technicians, “Reforming tax relief for trivial benefits: representation in respect of Budget 2026” (September 8, 2026). The £70, £425 and reimbursement proposals, the inflation basis and the quoted line. att.org.uk
- BKL, Stephen Baker, “Autumn Budget Analysis 2026: Employment Tax and Global Mobility” (October 28, 2026). Independent reading of the payrolling dates and the Class 1A timing point. bkl.co.uk
This article summarizes UK Budget documents and HMRC guidance for general information. It is not tax advice. Rules depend on each employer's circumstances, so confirm the treatment of any reward with your payroll provider or tax adviser.
About the author
Maciej has worked in the digital gift card and rewards industry for over 5 years. For this story he searched the full Budget 2026 document and its tax documents for any change to trivial benefits, read HMRC's trivial benefits guidance and the ATT's September representation, and checked the payrolling dates against BKL's Budget-day analysis. He worked out the inflation comparison and the 80-employee example.