Employers in Ireland have a range of ways to reward their employees, and one tax-efficient method is the Small Benefits Exemption (SBE). Introduced to make non-cash perks more accessible, the SBE allows employers to provide certain benefits to employees without triggering Income Tax, Universal Social Charge (USC), or Pay-Related Social Insurance (PRSI). 

What is the Small Benefits Exemption?

The Small Benefits Exemption enables employers to give tax-free benefits of up to €1,500 per employee per year. This applies to benefits such as: 

• Gift vouchers or gift cards
• Non-cash gifts like hampers or gadgets
• Small perks such as event tickets

The key is that the benefit must not form part of salary and must be non-cash in nature. 

Eligibility and Conditions

To qualify for the exemption: 

• The benefit must be provided in kind, not as cash or cash equivalents.
• The annual value of the benefit per employee must not exceed €1,500.
• The benefit must be provided to employees generally or to certain categories, but not solely to directors or key management.
• Employers must keep records of benefits provided for Revenue compliance.
   

How It Works in Practice

For example, an employer may give each employee a €500 gift card at Christmas. Under the Small Benefits Exemption, these gifts are tax-free for the employee and deductible for the employer, provided the total annual value does not exceed €1,500. 

It’s important to note that the exemption is per employee, per year, meaning employers can offer multiple small benefits throughout the year, as long as the €1,500 limit is not exceeded. 

Benefits of Using the SBE

• Tax-efficient employee rewards – Employees receive gifts without additional tax.
• Boost morale and engagement – Non-cash perks can improve workplace satisfaction.
• Simplified administration – With proper records, the SBE reduces payroll reporting requirements.
   

Points to Consider

• The SBE cannot be combined with salary sacrifice arrangements.
• Some benefits, such as annual leave, travel, or cash bonuses, do not qualify.
• The exemption applies only to employees, not contractors or freelancers.

The Small Benefits Exemption is a practical way for employers to reward staff while keeping tax liabilities minimal. By understanding the rules and keeping accurate records, companies can make the most of this scheme and enhance employee engagement.  

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