Small Benefit Exemption Scheme – reward up to €1,000 per employee (tax free!)

As Christmas approaches you may be looking for a way to show your employees your appreciation of their hard work during the year.

Cash payments are subject to payroll taxes however can reward your employees tax-free by giving them non-cash gifts or rewards up to a maximum of €1,000 per year.

Here are a few guidelines:

  • No more than 2 benefits are allowed per year and the maximum combined value must not exceed €1,000.
  • The benefit must not be in the form of cash/cheque/eft. Gift cards and vouchers are the most popular ways to avail of the scheme.
  • If you are buying pre-loaded credit cards, be sure that there is no option to withdraw cash from the card. These type of cards do not qualify under the terms of the small benefit exemption.
  • The benefit cannot be part of a salary sacrifice arrangement. This means you cannot offset the amount against the employee’s normal pay.
  • You do not have to give the full benefit of €1,000. Any amount is acceptable up to this limit.

Under Enhanced Reporting Requirements (ERR) any benefits given to employees in 2023 do not have to be reported. If you gift the benefit to the employee after the 1st of January 2024 you will need to file an ERR return with the Revenue Commissioners.