Reward. Motivate. Save Tax.

Under Irish Revenue’s Small Benefits Scheme, employers can now reward employees with a non-cash bonus of up to €500 in value completely tax free each year. Provided certain guidelines are followed neither the company nor the employee will pay PAYE, PRSI or USI, potentially saving €653.65 in tax.

To qualify for the tax exemption, only one tax-free bonus may be paid to each employee in any one year. If more than one bonus is given in a year, it is only the first one that will qualify for tax-free status, even if this bonus is less than the €500 annual allowance – any used allowance cannot be carried over. The tax-free bonus must be paid in non-cash form.

There is no paperwork and no return to be made to avail of the scheme. Companies (or sole traders) are simply invoiced for the total value of tax-free vouchers ordered. The invoice is treated as a normal business expenses for accountancy purposes, and there is no need to adjust payroll in any way – provided the above rules are followed. Business owners and director can also benefit from the scheme.

4 Steps to Tax-Free Rewards

step-1

Budget

You can reward up to €500 in non-cash rewards per employee, so it’s up to you to set the actual amount.

step-2

Ask Why

You can simply give a tax-free reward as a way of thanks, or you can put a programme in place for employees to earn their rewards

step-3

Order

You can order any type of voucher (or non-cash gift), though most employees prefer multi-retailer vouchers like AllGifts.ie

step-4

Account

The reward invoice is put through the company accounts as an expense, and doesn’t affect payroll in any way.

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