As Christmas approaches, you may be thinking about giving gifts to your employees. Gift cards and vouchers could be given without incurring taxes provided that they meet the criteria under the Small Benefit Exemption Scheme. There have been changes to the scheme announced in the Budget on 27th September 2022
A summary of the guidelines under the scheme are as follows:
· the voucher or benefit cannot be part of any salary sacrifice arrangement between the employee and employer
· The benefit must not be in cash. Cash benefits are fully taxable. Gift cards and vouchers are popular ways to avail of the scheme.
· the voucher or benefit cannot be exchanged in part or in full for cash
· The combined value of the benefit must not exceed €1,000. If it is more than €1,000, the full amount is subject to tax, not just the excess.
· Unused allowance amounts cannot be carried over
· No more than two benefits per employee per year. Subsequent benefits will be subject to tax even if the total amount is less than €1,000.
No paperwork is involved, and no return has to be made to avail of the scheme. Business owners are simply invoiced for the total value of tax-free vouchers ordered. The invoice is treated as a fully deductible business expense for accountancy purposes and there is no need to adjust payroll – provided the rules are followed and the recipients are on the payroll.