There’s lots of fun stuff about running a business (and lots of not-fun stuff, but we won’t talk about that). One of the best parts about being the boss is getting to treat your team. It’s lovely to say thank you for hard work, and your staff will love the little extras. But when tax gets involved, things can get confusing.

There are a few ways you can treat your team without triggering a tax bill (or creating admin headaches for yourself), from tiny treats to the annual Christmas knees-up. Here’s a quick guide to tax-efficient staff perks when you want to give your team a boost.

Small gifts

HMRC’s “trivial benefits” rules let you give small gifts to staff without needing to report anything or deduct tax.

But as with everything HMRC related, there are some rules to follow:

• The gift must cost £50 or less (including VAT)
• It can’t be cash or a cash voucher
• It can’t be a reward for work or performance
• It has to be a genuine gesture, not something agreed in a contract

If you’re a company director, you can give yourself up to £300 a year in these types of benefits, as long as each one stays under the £50 limit. If you’re gifting your employees, there’s no limit to the number of trivial benefits in a year, as long as each one is under £50.

Some ideas for trivial benefits:

• Bottle of wine
• Box of chocolates
• Gift card(s) (non-cash)
• Birthday cake
• Flowers or houseplant
• Coffee shop voucher
• Cinema voucher
• Puzzles or games
• Off-the-shelf hampers or care packages

Team lunches

Team lunches can be a tax-deductible business expense, but only if you follow HMRC’s staff entertaining rules (of course there are rules!).

The important bits:

• The lunch has to be occasional (think celebratory, not every Friday)
• It must be open to all employees, not just directors or select staff
• You’ll need to keep proper records (who was there and why it happened)

If it’s just directors, or if you’re a one-person company, it doesn’t count, HMRC will see that as personal, and it’s not deductible.

And if clients or suppliers are invited? That’s client entertaining, which means no Corporation Tax deduction and no VAT reclaim.

Used correctly, though, team lunches can be a nice morale boost and a legitimate business expense.

Staff parties

Throwing a party for your team isn’t just good for morale, it’s fun for the bosses and can be tax-efficient, too. Win-win-win! HMRC allows a bit of flexibility when it comes to staff entertainment, but as always, there are limits you’ll need to stay within.

• The event must be annual (e.g. Christmas party, summer BBQ)
• It must be open to all employees (not just a chosen few)
• The total cost must not exceed £150 per head, including VAT, food, drinks, transport and any overnight stay
• If you go over £150 per person – even by a few pence – the entire cost becomes taxable, not just the amount over

Also worth noting: if the event is only for directors (with no other staff attending), it won’t qualify as staff entertainment. HMRC will treat it as a personal expense.

Christmas/holiday/birthday gifts

Unfortunately, there isn’t a separate rule for holiday or birthday gifts. If you want to give your team a little something at the end of the year or for their birthday, you can – but it has to fit within HMRC’s “trivial benefit” rules (more on that above).

Office comfort perks

If you want your team to be comfortable and productive, it makes sense to invest in their workspace, whether in your company office or their home office. A lot of day-to-day equipment and setup costs can be put through the business, if done properly.

• Office chairs, desks and monitor stands are generally allowed if needed for work
• Computer accessories, webcams, second screens or headsets usually qualify
• Small items like lamps or organisers are often fine, if they’re functional
• Items should be necessary for the employee’s job, not personal luxuries, and have to be solely for work purposes (not personal)

Just make sure to keep receipts and records. Anything clearly personal or purely decorative might be questioned if HMRC takes a closer look.

Wellness perks

Mental and physical wellbeing perks are increasingly popular with employers, but tax treatment varies depending on what you’re offering.

• Eye tests are allowed (and in some cases, required) if the employee regularly uses a screen
• Annual health checks are fine, but only if part of a recognised scheme
• Gym memberships are usually taxable unless provided on your business premises
• Other perks like wellbeing allowances, therapy sessions, private medical insurance or personal trainers often count as benefits-in-kind

When it comes to perks, a little planning goes a long way. With the right setup, you can treat your team, boost morale, and stay on the right side of HMRC.