The Small Benefits Exemption Scheme allows an employer to provide an employee with a small benefit tax free each year. It is frequently paid at Christmas so is sometimes known as the Christmas bonus scheme.
Terms and conditions
- The benefit must not exceed €250.
- The benefit must not be in the form of cash. For this reason vouchers are traditionally given.
- Only the first benefit each year will qualify for the exemption.
If a benefit exceeds €250, the full value of the benefit is subject to tax, USC and PRSI. For example if a €300 voucher is given, the full €300 should be included as a benefit in kind on payroll and the relevant tax, USC and PRSI calculated.
If two benefits are received during the year, only the first one will qualify for the exemption. As an example, if an employee receives a €100 voucher in May, and a €150 voucher in December, only the €100 will qualify for the exemption and €150 should be subject to tax, USC and PRSI.
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