A long service award is a gift or act of recognition given to an employee for reaching a length-of-service milestone, usually 1, 5, 10, 20 or 25 years. In the UK, a non-cash award is only tax-free under the long service exemption if the employee has at least 20 years' service, the award is worth less than £50 per year of service, and they have had no long service award in the last 10 years.
- Typical milestones: 1, 3, 5, 10, 15, 20, 25 and 30+ years
- Tax-free cap: £1,000 at 20 years, £1,250 at 25 years, £1,500 at 30 years
- Cash is always taxable: it goes through payroll as pay
- Before 20 years: awards are a taxable benefit unless another exemption or a PAYE Settlement Agreement covers them
General information for UK employers, not tax advice. Check your own position with your accountant or HMRC.
What is a long service award?
A long service award recognises the number of years an employee has worked for you. It can be a gift, a certificate, extra paid leave, an experience or a charitable donation made in their name. The value usually rises with each milestone, and the most generous awards tend to go to people with 20 years or more.
Most employers mark a mix of these points:
- 1 year: a thank you after the first full year, often when people decide whether to stay
- 3 and 5 years: the first meaningful tenure milestones
- 10 and 15 years: a real contribution, usually marked publicly
- 20, 25 and 30+ years: the awards that tend to be remembered, and the ones the HMRC exemption is written for
A long service award is different from a performance bonus or a one-off thank you. It is tied to time served, not to a result, so it can be given consistently to everyone who reaches the same point. It is also one part of wider reward and recognition.
Are long service awards taxable in the UK?
It depends on the type of award, the employee's length of service and whether they have had an award before. HMRC exempts a non-cash long service award from tax and National Insurance only when all three of these apply:
- The employee has worked for you for at least 20 years.
- The award is worth less than £50 per year of service.
- You have not given them a long service award in the last 10 years.
If you meet all three, you do not report or pay anything on the award. The exemption does not apply if the award is part of a salary sacrifice arrangement.
| Type of award | Employee circumstances | Tax and reporting |
|---|---|---|
| Non-cash (gift, hamper, item) | 20+ years, no award in last 10 years, under £50 per year | Exempt. Nothing to report or pay. |
| Non-cash | 20+ years, no award in last 10 years, over £50 per year | Report on form P11D. Class 1A National Insurance on the value above £50 per year of service. |
| Non-cash | Under 20 years, or an award in the last 10 years | Report on form P11D. Class 1A National Insurance on the full value. |
| Cash | Any | Counts as earnings. Run through payroll with PAYE tax and Class 1 National Insurance. |
| Readily convertible asset (for example shares) | Any | Added to earnings. The value above £50 per year (if 20+ years and no award in 10 years) or the full value (otherwise) goes through payroll. |
Source: GOV.UK, "Expenses and benefits: long-service awards". Checked 5th November 2026.
Can you give an award before 20 years?
Yes. Most employers do, at 1, 5 and 10 years. These awards are a taxable benefit, so there are three common routes:
- Report it on a P11D and pay Class 1A National Insurance on the value.
- Use a PAYE Settlement Agreement so you pay the tax and National Insurance on the employee's behalf.
- Use the trivial benefits exemption where the gift qualifies. It must cost £50 or less, not be cash or a cash voucher, not be part of the employee's contract and not be a reward for work or performance. Because a service award is linked to time served, take advice before relying on this one.
A director of a close company (broadly, one run by five or fewer shareholders) cannot receive more than £300 of trivial benefits in a tax year.
The 10-year rule only works if you can prove when the last award was given. Record the date, the value and what was given, for every employee, including awards made before you set up a formal scheme.
What can you give tax-free?
Enter the years of service and, if you like, the value of the award you have in mind. This applies to non-cash awards only.
Assumes no long service award in the last 10 years and no salary sacrifice. Not tax advice.
How much should you spend on a long service award?
There is no set amount, but a rising scale feels fair and is easy to explain. These ranges are WellBox's suggested starting points for UK employers, not an industry benchmark. Adjust them to your margins and your culture.
| Service | Suggested budget | What it can buy | Tax position |
|---|---|---|---|
| 1 year | £10 to £25 | A handwritten card, a treat, a small gift | Taxable benefit unless covered by another exemption or a PAYE Settlement Agreement |
| 3 years | £25 to £50 | A wellbeing gift or a quality food gift | As above |
| 5 years | £50 to £100 | A hamper, a plant, a choice of gifts | As above |
| 10 years | £100 to £250 | A premium gift, an experience, an extra day's leave | As above |
| 15 years | £150 to £400 | A larger gift plus a donation in their name | As above |
| 20 years | £250 to £1,000 | A high-quality item or experience | Exempt up to £1,000 |
| 25 years | £500 to £1,250 | A major gift, a trip, a celebration with the team | Exempt up to £1,250 |
| 30+ years | £750 to £1,500+ | Something personal and lasting | Exempt up to £50 for each year |
Suggested budgets per person. Tax column assumes a non-cash award and no earlier award in the last 10 years.
Long service award ideas by milestone
The best awards are proportionate, personal and not the same at every stage. Where you can, let people choose, because tastes, diets and home lives differ. A gift portal lets each person pick their own gift and enter their own delivery address.
1 year£10 to £25
Mark it, do not overthink it. A thoughtful thank you matters more than the value.
- A handwritten note from their manager
- A small food or wellbeing gift
- A coffee or lunch with their team
5 years£50 to £100
Something they would not usually buy themselves.
- A hamper or letterbox gift
- A choice of gifts through a gift invite
- A houseplant or flowers delivered to their home
10 years£100 to £250
A decade is a big moment. Make it generous and visible.
- A premium gift or experience
- An extra paid day off
- A charity donation in their name, plus a gift
20 yearsUp to £1,000 tax-free
This is the milestone the HMRC exemption was written for. Personal beats expensive.
- A high-quality item they have mentioned wanting
- An experience for them and a partner
- A team celebration with a letter from the CEO
25 years and beyond£50 per year, tax-free
Few people reach it. Treat it like the event it is.
- A trip or a day out
- A lasting keepsake
- A paid sabbatical or extra leave alongside the gift
What do you get an employee for 10 years of service?
Most UK employers spend between £100 and £250 on a 10-year award. Good options are a premium gift they can choose themselves, an experience, an extra day of paid leave, or a donation to a charity they care about alongside a smaller gift. Add a personal message from their manager, as the words are what people keep.
Non-gift awards worth considering
- Extra paid leave. Often valued more than an item, and it costs less than it appears.
- A sabbatical. Increasingly used for 10 and 15 year milestones.
- A charitable donation. Good for people who say they have everything.
- An experience. Dinner, a spa day or tickets, ideally with a plus one.
If you want a ready-made shortlist, browse our employee milestone gifts, wellbeing gifts, hampers and food gifts and flowers and plants.
What to write: long service award wording
Specific beats generic. Name something the person did, then say thank you plainly. Keep it to a few sentences.
1 year"Happy first anniversary, Sam. A year in and you have already changed how our team works. Thank you for everything you have brought to it."
5 years"Five years, Priya. Thank you for your reliability, your calm and the way you help others. We are lucky to have you."
10 years"Ten years is a remarkable thing, Alex. Thank you for a decade of commitment. The business is better for every one of those years."
20 years"Twenty years, Jo. You have seen this company grow and helped shape it. We are grateful, and we are proud to call you a colleague."
Certificate line"Presented to [name] in recognition of [number] years of dedicated service to [company], [date]."
How to build a long service award programme
- Choose your milestones. 1, 5, 10, 15, 20 and 25 years covers most needs. Add 3 years if you want to support early retention.
- Set a budget for each tier. Use a rising scale and check the tax position of each tier with your accountant.
- Decide how people receive it. Gifts can be chosen for them or chosen by them. Letting people choose and give their own delivery address works well for remote and hybrid teams.
- Decide who delivers it. Managers make awards feel personal, with HR handling the admin behind the scenes.
- Record every award. Date, value and what was given. The 10-year rule depends on it.
- Plan ahead. Pull the next 90 days of milestones from your HR system each month, so nobody is missed or sent a late gift.
- Review once a year. Check budgets, the tax position and whether the awards are still landing with your people.
Want the admin handled?
WellBox Milestone Gifting plans a full year of work anniversary gifts, with different gifts at the milestones you choose. No platform fees and no contract. You only pay for the gifts you send.
Common long service award mistakes
- Giving cash without realising it is taxable. It must go through payroll as pay.
- Not recording past awards. Without a record you cannot show the 10-year gap.
- Treating every milestone the same. A 1 year and a 20 year award should not feel identical.
- Forgetting remote and hybrid staff. Awards that only work in the office leave people out.
- Missing dates. A late award feels worse than none.
- Making it all HR. A personal message from a manager matters most.
- Assuming the 20-year rule applies to everyone. Below 20 years, awards are a taxable benefit.
Long service award FAQs
What is a long service award?
A long service award is a gift, certificate, extra leave or other recognition given to an employee for reaching a length-of-service milestone, usually 1, 5, 10, 20 or 25 years. The value normally increases with the length of service.
Are long service awards taxable in the UK?
Cash awards are always taxable. A non-cash award is tax-free only if the employee has at least 20 years' service, the award is worth less than £50 per year of service, and they have had no long service award in the last 10 years. Otherwise it is a taxable benefit that must be reported to HMRC or covered by a PAYE Settlement Agreement.
How much tax-free can you give for 20 years' service?
Up to £1,000, because the limit is £50 for each year of service. At 25 years the limit is £1,250 and at 30 years it is £1,500.
What do you get an employee for 10 years of service?
Typical awards cost £100 to £250: a premium gift they can choose, an experience, an extra day of leave or a charity donation alongside a smaller gift. Add a personal message from their manager.
How do you congratulate someone for long service?
Name something specific they have done, say thank you plainly and keep it short. For example: "Ten years, Alex. Thank you for a decade of commitment. The business is better for every one of those years."
Can you give a long service award for less than 20 years?
Yes, and most employers do. It is a taxable benefit unless another exemption applies. Employers usually report it on a P11D, cover it with a PAYE Settlement Agreement, or, where it qualifies, use the trivial benefits exemption.
Are long service awards still relevant?
Yes, if they are personal and timely. Awards feel dated when they are generic, late or the same at every stage. Choice, a genuine message and a fair rising scale keep them meaningful.
Should a gift card be used as a long service award?
A voucher that can be exchanged for cash is treated as cash and is taxable. Other vouchers have their own rules, so check the type with your accountant before using one.
Do small businesses need long service awards?
No law requires them, but small teams often get the most from them. Start with 1, 5 and 10 years and add more as the team grows.
Sources and further reading
- GOV.UK: Expenses and benefits, long-service awards
- GOV.UK: Long-service awards, what's exempt
- GOV.UK: Long-service awards, what to report and pay
- GOV.UK: Trivial benefits
Tax thresholds checked against GOV.UK on 5th November 2026. Rules change, so confirm the current position before you finalise a scheme.