Ireland's small benefit exemption scheme
Frequently asked questions
Can I give more than €1000 under the small benefit exemption scheme?
Where the gift or voucher exceeds €1,000, the full value is subject to PAYE, USC and PRSI. The benefit cannot be part of a salary sacrifice arrangement.
In order to maximise the tax-free allowance, provide each employee with two instalments of €500 per year.
Is Freenow mobility budget benefit in kind? (BIK)
No. However, if you exceed the €1,000 limit, or give the benefit in more than two instalments, they will be taxable.
How much can employers save by using the small benefit exemption scheme?
Employers can make considerable savings by using the exemption to reward their employees.
If you were to put a bonus of €1,000 through payroll for an employee who’s on the higher tax band and pays PRSI and tax, it would cost your business €2,313.54.
By using the exemption, you can make potential savings of up to €1,313.54 per employee compared to putting it through payroll.
How do employees benefit from the small benefit exemption scheme?
Any employee on your company’s payroll – both part time and full time – who pays PAYE income tax, PRSI and USC can benefit from the scheme. How much they save in taxes depends on the tax rate they’re on and what level of USC and PRSI they pay.
Your employee receives the full value of the bonus, which they can use as they wish.
How employers can start using the small benefit exemption scheme?
Using the scheme is straightforward. There is no need to file a return or make adjustments to payroll.
The employer gives each employee their mobility budget allowance vouchers, and the invoice is treated as a fully deductible expense. Instead of using the payroll system, it is recorded as a ‘non-taxable benefit’.