Long Service Award Tax Calculator 2026

A tax-free reward given by an employer to an employee to recognise long service. The award must be a non-cash tangible article, service must be 20+ years, and the amount must not exceed £50 per year of service.

£50 × years of service. For 25 years' service, the max exempt amount is £1,250. Any excess is a taxable benefit in kind.

Cash awards (and cheques, gift vouchers exchangeable for cash) do not qualify for the long service award exemption — they are fully taxable as earnings.

Physical goods: a watch, piece of jewellery, crystal, artwork, or other tangible gift. Non-cash vouchers (store gift cards) may also qualify if the specific conditions are met.

If you gave a tax-free long service award in the past 10 years to the same employee, you can't give another exempt award until 10 years have passed from the last one.

HMRC guidance suggests continuous service. Career breaks may break continuity — check with your employment solicitor.

Report on the employee's P11D (Expenses and Benefits return). The employee pays income tax and there may be a Class 1A NI charge for the employer.

Yes — the same rules apply to director-employees. The awards are exempt up to £50 per year of service, provided the director has 20+ years of service.

No — the exemption applies automatically if all conditions are met. Keep records of the award value, nature, and employee service dates.

Not under the long service award exemption. However, if it's an annual event (Christmas party, etc.) the £150/head annual event exemption may apply instead.

Long service awards are for employees. Partners in a business partnership are not employees and the exemption doesn't apply.

Additional paid holiday for long service is treated as normal pay (taxable and NI-able). The exemption only applies to physical gifts, not pay or holiday.