Long service awards in the UK: how to recognise loyalty without the awkwardness
Summary
Long service awards recognise employees who stay with your organisation for a set number of years - often 5, 10, 20, or 25 years. In the UK, HMRC allows tax-free long-service awards only when strict conditions are met (including a minimum 20 years' service in many cases). For everything else, treat awards like any other benefit: check trivial benefits, P11D, or PSA. The best programmes combine clear eligibility, inclusive gifts or choice, and a celebration that feels genuine - not a box-ticking exercise.
Long service awards at a glance
| Topic | Practical takeaway |
|---|---|
| Purpose | Mark tenure; reinforce that loyalty is noticed |
| Common milestones | 5, 10, 15, 20, 25, 40 years |
| Tax (high level) | Special rules for qualifying long-service awards; otherwise normal benefit rules apply - see HMRC and your adviser |
| Gift approach | Choice-led gifts often land better than one-size-fits-all |
| Inclusion | Same criteria for all roles; watch shift workers and parental leave |
This guide is not tax advice.
What are long service awards?
Long service awards are formal or semi-formal recognition for reaching a tenure milestone. They might be:
- A gift or voucher at 10 years
- An extra day's holiday at 5 years
- A dinner, plaque, or team celebration at 20 years
- A choice of gift from a catalogue at 15 years
They differ from everyday recognition because they are predictable (employees know the milestone exists) and organisation-wide (same rules for a cohort).
Why they matter (and where they go wrong)
Why they matter: Tenure often correlates with deep organisational knowledge. Publicly marking milestones signals that commitment is valued - especially in industries with high turnover.
Where they go wrong:
- Awards feel tokenistic (cheap item, no message)
- Criteria are opaque (who decides, and when?)
- Parents or part-time workers miss out unfairly compared to full-time peers
- The gift is something nobody wants (logo-heavy merch with no choice)
Fixing those four issues does more for retention than increasing gift value alone.
Designing a fair policy
Eligibility
Be explicit:
- Which milestones count (e.g. 5/10/20 years)?
- Does tenure include probation? Parental leave? Secondments?
- What happens after a break in service (rehire)?
Timing
- Fixed anniversary of start date, or financial year?
- Who triggers the award - HR system, manager, or both?
Communication
Tell people before they hit the milestone what to expect. Surprises are nice; confusion is not.
Gift ideas that scale
| Budget band | Ideas |
|---|---|
| Under £25 | Quality food hamper, book tokens, charity donation option |
| £25-75 | Gift with choice, experience voucher, premium hamper |
| £75+ | Higher-value experiences, extra leave (if policy allows), team meal |
Gift with choice works well when your workforce is diverse - same budget, personal pick.
Long service and HMRC (non-technical overview)
The UK has a specific exemption for certain long-service awards when conditions are met (including length of service and that the award is not cash). The rules are strict; many employer gifts instead fall under trivial benefits or are reported as benefits in kind.
You should:
- Document what you give and why
- Involve payroll or your tax adviser for anything beyond small, occasional gifts
- Read HMRC employment income manual sections on awards with your adviser
Link out to authority; do not paraphrase law as definitive advice on the Huggg blog.
FAQs
How many years count as long service?
There is no legal UK definition for internal programmes - companies commonly use 5, 10, or 20 years. Tax rules for exempt long-service awards have their own thresholds; ask your adviser.
Are long service awards taxable?
They can be, unless a specific exemption applies. Cash is usually taxable. Non-cash awards may be exempt in narrow cases - get professional advice.
What is better: a gift or cash?
Cash is simple but often taxable and feels like pay. Gifts with choice can feel more celebratory and may fit exemptions better in some cases - confirm with payroll.
Should managers or HR own long service awards?
HR usually owns policy and eligibility; managers add the personal message. Automation from HR systems reduces misses.
How do we include remote workers?
Ship to home via a platform that does not require you to hold addresses, or use digital choice-led rewards.
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Last reviewed: April 2026
Last updated: 14 April 2026
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