Branded cups as staff Christmas gifts: when the trivial benefits exemption applies

A branded reusable cup in each member of staff's Christmas box is a small gift, and the tax question is whether the employee is taxed on it. The rule that usually answers it is the trivial benefits exemption in sections 323A and 323B of the Income Tax (Earnings and Pensions) Act 2003, which HMRC describes in a short GOV.UK page. This article sets out the conditions, what they leave out, and how they apply to a cup in our reading. It covers income tax on the employee only. Our guide to promotional cups as business gifts covers gifts to customers, which sit under different rules.

The four conditions

Section 323A(1) says no liability to income tax arises in respect of a benefit provided by, or on behalf of, an employer to an employee, or to a member of the employee's family or household, if conditions A to D are met. They are:

- Condition A: the benefit is not cash or a cash voucher. - Condition B: the benefit cost does not exceed 50 pounds. - Condition C: the benefit is not provided under relevant salary sacrifice arrangements or any other contractual obligation. - Condition D: the benefit is not provided in recognition of particular services performed by the employee in the course of the employment, or in anticipation of such services.

HMRC's page puts the same test in plainer words. It says there is no need to pay tax or National Insurance or tell HMRC if the benefit cost 50 pounds or less to provide, is not cash or a cash voucher, is not a reward for work or performance, and is not in the terms of the contract. It adds that a benefit provided through a salary sacrifice arrangement is not exempt. The page shows 1 April 2015 as its last update, so the statute is the authority where the wording differs.

What counts as the cost

Section 323A(5) defines benefit cost as the cost of providing the benefit. Where a benefit goes to more than one person and it is impracticable to work out the cost for each, because of its nature or the scale of provision, it is the average cost per person: the total cost divided by the number of people who receive it (section 323A(6)). The Act does not list which costs go into the figure, so for a printed cup it does not say in terms whether printing, delivery or VAT count. HMRC's page speaks of what it cost the employer to provide. In our reading, the safest way to apply a limit is to count the whole cost of the cup to the employer.

Directors of close companies

Section 323A(2) adds a fifth condition where the employer is a close company and the employee is a director or other office-holder, or a member of the family or household of one. Under section 323B(2) the annual exempt amount is 300 pounds, and the benefit cost must not exceed the amount of that exempt amount still available after eligible benefits earlier in the tax year. HMRC's page says a director of a close company cannot receive trivial benefits worth more than 300 pounds in a tax year, and describes a close company as a limited company run by five or fewer shareholders. The Act's own definition of close company was not read for this article, so that description is the page's.

What this means for a branded cup

In our reading, a cup given to every member of staff at Christmas is not cash, is not provided under the contract of employment, and is not a reward for particular services, so conditions A, C and D are likely to be met, and condition B turns on the cost per cup against the 50 pound limit. The same cup given as a long-service award or a reward for hitting a target is closer to the case condition D excludes. A gift that staff can choose to take in place of salary falls under the salary sacrifice exclusion. Cups given to family members of staff are within the wording of section 323A(1), and where a benefit goes to a family member who is not an employee, section 323B(4) allocates a share of its cost, divided among the qualifying people in that family or household, to the director or office-holder concerned for the purposes of the 300 pound cap.

The Act does not mention logos or branding. A cup printed with the employer's name is, on the text, a benefit like any other.

The reusable coffee cups page describes branded reusable coffee cups with lids for daily service, corporate gifting, outdoor events and hospitality teams. Whether a particular order falls within the exemption depends on the cost per cup and the conditions above, and nothing on the page says that it does.

What this article does not cover

The exemption removes the income tax charge on the employee. It does not decide whether the employer can deduct the cost, whether VAT on the purchase can be recovered, or what other reporting applies, and the sources read do not answer those. HMRC's page notes that a salary sacrifice arrangement is not exempt and must be reported on form P11D at the higher of the salary given up and the amount paid. The annual party exemption for staff events is a separate rule with its own limit.

Where this stands

This was checked on 6 October 2026. Sections 323A and 323B extend to the United Kingdom and are up to date with the changes known to be in force on or before 4 and 6 October 2026. Changes from the Finance Act 2026 listed as yet to be applied concern employee car and van ownership schemes and payments for cancelled shifts, and do not touch these sections. The GOV.UK page is dated 1 April 2015. To price a branded run for staff, ask for a quote.