SMALL BENEFIT EXEMPTION

Employers, give up to €1000 tax free!

Irish Revenue's Small Benefit Exemption Scheme

Big Tax Savings

Under the Inland Revenue’s Small Benefits Exemption scheme an employer can give up to €1000 in gift vouchers tax free to each employee or director each year.

No PAYE, PRSI and USC is liable on the award by the employee or employer – enabling employees get a real cost of living bonus with great tax savings.

Up to €1300 per person tax savings in fact!

A table breaking down the cost of giving €1000 to a higher rate tax payer

This tax benefit really does put extra spending power in employees' pockets, saves tax and has the added benefit of helping bring much needed customers to Irish high streets, shops, restaurants, attractions and other retail businesses throughout the country.

There are a few caveats and rules to follow, but not that many – it’s a pretty straight forward scheme that’s easy to implement – especially with an OptionsCard.

Clear rules to follow

Tax-free vouchers or benefits can be used only to purchase goods or services. They cannot be redeemed for cash.

This "cannot be redeemed for cash" bit is crucially as many 'spend anywhere' cards do not qualify and you could end up with a big tax bill. Always check the Ts&Cs – if you can redeem the gift card for cash, or use at an ATM, it will not be valid for the benefit.

Employers can give up to 2 tax free benefits each tax year, up to a total value of €1,000. If more that 2 benefits are given, only the first 2 count. If more than €1000 is given, the whole lot is taxable!
The scheme can be used for most types of employee rewards and bonuses and can be used by directors and officers too provided they are paid employees of the company. However, it cannot be used for salary sacrifice or in lieu of pay.
The cut off date is Dec 31 each year
From 1 January 2024 you must keep a record of the benefits given out to each employee and report this to Inland Revenue.

For the full details of the scheme see the Inland Revenue website here. And, of course, if it's not clear, ask your tax advisor first.

AS PART OF OVATION INCENTIVES

Trusted by leading brands worldwide