Employers; are you availing of the small benefits exemption for employees?

Under a long standing Revenue concession, commonly referred to as the “small benefit exemption”, employers were able to provide a one-off tax free benefit to an employee not exceeding €250 per year.

With effect from the 22 October 2015, this threshold was increased to €500. It applies to vouchers and benefits other than cash.

For example, if an employer gives each employee one single €500 voucher in the year, the value of the voucher is exempt from PAYE, USC and PRSI. An employer cannot provide a number of small benefits tax free. The relief applies to a one off benefit. If the employer gives two vouchers worth €200 and €300, the value of the first voucher is exempt but the value of the second voucher would be taxable. If the employer gives one voucher for €600, the value of the entire voucher is taxable.

The benefit cannot be part of a salary sacrifice arrangement and vouchers must only be used to purchase goods or services and cannot be exchanged for cash.

Please contact your usual contact RSM Ireland for any further details.