How much should you spend per employee on rewards?

Ask a supplier how much to spend per employee on gifts or rewards, and you're preeetty likely to hear "1% of payroll". That figure comes from one 2012 survey of large North American employers, paid for by a software vendor... and it never actually said what it's now quoted as saying. It's also not super relevant for UK employers.

Huggg is a UK employee gifting platform, and this is the question we get asked more than any other, usually by someone who has to defend a number to a finance director.

Quick answer: There's no representative UK benchmark for reward spend per employee. The closest figure is Huggg's own survey of 85 UK HR professionals, where 52.9% spend £50 to £200 per employee per year. The only percentage-of-payroll data in existence is North American, and it sits well below the folklore: WorldatWork's 2019 Trends in Employee Recognition report says recognition budgets are "generally 0.3% or less of the payroll budget", and in WorldatWork's 2015 distribution roughly two thirds of employers with a budget were under 1%. For a UK employer the more workable anchor is HMRC's £50 trivial benefits limit as a per-occasion unit, multiplied by the number of occasions you actually want to mark.

Where the "1% of payroll" figure comes from

The SHRM/Globoforce Employee Recognition Survey, Fall 2012 Report. Fieldwork ran 31 August to 21 September 2012, with 815 HR professionals at North American organisations of 500 or more employees, commissioned by Globoforce, a recognition software vendor now called Workhuman.

Word for word: "Organizations that spend more than 1% of payroll on employee recognition experience better results." Its splits are real. Among those North American employers spending below 1%, 74% reported a positive impact on engagement, against 85% of those at 1% or more, and on financial results the gap was 33% against 59%.

Read that again. It doesn't say the average is 1%, or the median, and it doesn't recommend 1%. It reports a correlation between two self-selected groups, fourteen years ago.

So if a supplier tells you the benchmark is 1% of payroll, ask for the report name, the year and the sample size. We went looking, and they're quoting research their own industry paid for.

What does the published benchmark data actually say?

Lower numbers, consistently. The best-documented source is WorldatWork's *Trends in Employee Recognition*, whose 2019 edition (315 respondents, North America, WorldatWork members) states plainly that recognition budgets are "generally 0.3% or less of the payroll budget". That edition also found 32% had no recognition budget at all, and prevalence has fallen every edition: 80% in 2015, 72% in 2017, 68% in 2019.

The 2015 edition is the last to publish a usable distribution. Among 233 North American organisations with a recognition budget, fieldwork 18 February to 10 March 2015, the split by percentage of payroll was:

• 0%: 3% of employers
• 0.1% to 0.3%: 42%, the largest single band by a wide margin
• 0.4% to 0.6%: 15%
• 0.7% to 0.9%: 8%
• 1.0% to 1.9%: 20%
• 2.0% to 2.9%: 6%
• 3.0% to 4.9%: 2%
• 5.0% to 10.0%: 3%
• above 10.0%: 3%

The median sits in the 0.4% to 0.6% band, not at 1%, and roughly two thirds budgeted under 1%. The real-world figure is around a third of the number quoted as the standard.

Caveats travel with all of it. This is North American, drawn from WorldatWork's own membership, and skewed large: only 6% of the 2015 respondents had fewer than 100 people. UK payroll costs are structured differently too, with employer NICs and auto-enrolment inside the total, so the percentage doesn't transfer cleanly.

Is there any UK data on reward spend per employee?

Almost none, and that's a finding rather than a research failure. The CIPD's flagship UK reward survey, *Focus on employee benefits 2026*, published 24 February 2026 and run by YouGov with 1,059 UK reward and HR decision-makers (fieldwork October to November 2025), doesn't measure recognition spend at all. Drewberry's 2026 UK report, 626 respondents, carries no per-employee figure either.

What the UK sources give you is prevalence. In that CIPD/YouGov survey, 34% of UK organisations offer a "bonus/hamper/vouchers/gifts offered at Christmas or other times of the year". The sample is weighted by number of employers, so micro-businesses dominate and prevalence reads low to a mid-market reader.

The nearest per-employee figure with UK companies in it's the Incentive Research Foundation's *Industry Outlook for 2026*, 400 respondents collected August to September 2025, split evenly between North America and Europe. Average annual per-person gifting expenditure was EUR 940 in Europe and USD 866 in North America. The UK sits in the European sample but isn't broken out, and it measures organisations already running non-cash gifting, so it's self-selected rather than an average.

Two more, both labelled:

• O.C. Tanner, a US recognition vendor, recommends setting aside USD 200 to USD 350 per employee per year, based on their own client work rather than survey data
• our own survey of 85 UK HR professionals found 52.9% of UK organisations spend £50 to £200 per employee per year on gifting, written up in our UK employee gifting benchmarks

Eighty-five respondents is a small sample and we'd rather say so than dress it up. It's also, as far as we can find, the most UK-specific figure published anywhere, which tells you how thin this gets.

The one UK per-employee figure that does exist is our own. Huggg surveyed 85 HR professionals across 80+ UK organisations between Q4 2025 and Q1 2026, and 52.9% reported spending £50 to £200 per employee per year on gifting, with 23.5% spending under £50. Bigger companies don't reliably spend more per head: enterprise organisations were almost as likely to spend under £50 as mid-market ones were to spend over £200.

Two honest caveats on our own number, because they matter more than the number does. 85 respondents is a useful indication, not a nationally representative sample. And it measures gifting rather than total reward spend, so it's not comparable with the payroll-percentage figures above. Full method and the cuts by company size are in the Huggg UK Employee Gifting Benchmarks 2026.

How to set your own number without a benchmark

Turn the question round. Ask how many occasions you want to mark and what each is worth. That's answerable, and it's the version your finance director will accept.

Why this works in the UK: HMRC's trivial benefits exemption is £50 or less per person including VAT, and there's no cap on how many an employee can receive in a tax year, the one exception being directors of close companies at £300 per tax year. So £50 is a natural efficient unit, and your annual figure becomes occasions multiplied by per-occasion value. Our guide to trivial benefits and gift cards covers the four conditions properly.

A worked example:

1. List the occasions you intend to mark. Say a birthday, a work anniversary, one company-wide moment and two manager-led thank-yous, so five a year
2. Set a value for each. £50 for the birthday, £50 for the anniversary, £30 for the company-wide send, £20 each for the thank-yous
3. Add them up. That's £170 per employee per year
4. Multiply by headcount to get the ask. For 200 people, £34,000
5. Sense-check against your own payroll, not someone else's. On an average employment cost of £40,000 per head, £170 is 0.43%, inside the range WorldatWork's North American data actually reports
6. Decide what you'd cut first if the number gets trimmed, before anyone asks

HMRC's £50 is the cost to you including VAT, so a gift listed at £48 counts as £48 and there's no reduced ceiling to work around. Two other exemptions sit alongside it and are separate from it, the £150-per-head annual function allowance and long service awards at 20 years or more. Tax treatment depends on your circumstances, so check with your accountant or HMRC before you commit to a figure.

Why the same money buys a different outcome

This is the part Huggg has the most visibility on, because we can see what people pick when they're given a free choice.

The number matters less than what it turns into. Emily Hall, Head of Engagement at Octopus Energy, put it better than any budget paper we've read:

> "If I just handed someone £30 right now, realistically they'd spend it on something they need but don't want - groceries, a household bill. But with a curated list of gifts, they get the thing they actually want."

Same £30. One version vanishes into a utility bill, the other becomes a thing the person chose, and that difference costs nothing. Emily also calls it "totally worth it from an ROI perspective", a case built properly in corporate gifting ROI. Getting the money spent at all is a separate problem, answered in why reward budgets go underspent.

With Huggg there's no platform fee to budget for in the first place: you only pay for the gifts you send. No per-employee charge, so a £170-per-person plan costs £170 per person, and the listed price is the total including VAT, which keeps the £50 arithmetic honest. Have a look at how employee recognition gifting works, with 10,000+ gift options across 700+ brands, if you're setting next year's number now.

If you'd rather start from a number somebody else has defended, the Huggg benchmarks report has the spend bands by company size, and Huggg itself is free to use with no platform fee to budget for, so the whole budget goes on the gifts.

Frequently asked questions

Is there a UK benchmark for reward spend per employee?

No representative UK survey publishes this figure. The closest UK number is Huggg's own 2026 survey of 85 UK HR professionals, in which 52.9% of organisations reported spending £50 to £200 per employee per year on gifting and 23.5% spent under £50. Treat any confidently-stated UK average with suspicion and ask for the source.

Is 1% of payroll a real recognition budget benchmark?

No. It originates in the SHRM/Globoforce survey of autumn 2012, which reported that North American organisations spending above 1% saw better results, from a vendor-commissioned sample of 815 HR professionals at employers of 500-plus people. WorldatWork's own 2019 published position is that recognition budgets are "generally 0.3% or less of the payroll budget".

How many gifts can I give an employee tax free in a year?

Under HMRC's trivial benefits exemption there's no cap on the number, provided each gift is non-cash, costs £50 or less per person including VAT, isn't a reward for work done and isn't contractual. Directors of close companies are capped at £300 per tax year. A penny over £50 on a single gift makes the whole amount taxable.

What's a reasonable per-occasion value for a thank-you gift?

For an everyday thank-you, £10 to £25 does the job if it arrives quickly and carries a real message. Save the full £50 for the moments people remember, like a birthday or a work anniversary. What people take from a gift tracks the reason far more closely than the amount.