Small Benefit Scheme – 4 Key Rules
To provide tax-free rewards to employees under the Scheme, you must adhere to 4 basic rules:
1. Once per Year
The benefit can only be given once per year in a single award. As the tax year in Ireland is January 1st – December 31st, this means that if an employer makes an award to an employee in January, then the full year’s €500 BIK-relief is used up for that employee, even if the reward is less than the €500 threshold.
The benefit must be in non-cash form that cannot be converted into cash. This means that it cannot be paid through payroll, or for example on any company expense credit card that could be used at an ATM to withdraw cash.
3. Below the €500 Threshold
The benefit cannot exceed the threshold, which is currently €500 per employee per year. The employer can award a lower amount than €500, or different amounts to different employees, but no employee can receive more than €500 in value.
4. No Salary Sacrifice
The benefit cannot be funded from a deduction in salary from the employee, so the company needs to be invoiced for the total benefit amount, and needs to pay for the total value of the rewards from the company’s own funds.