Coming up to Christmas is usually a busy period for most businesses and the wish to reward your staff for a year of hard work can often result in arranging Christmas parties and planning to pay out Christmas bonuses. Thanks to the Small Business Exemption Scheme, Employers can now reward their staff with a non cash bonus of up to €500.
€500 tax free?
A once off, €500 tax free voucher can be paid to your staff to reward them for their hard work throughout the year. This can be used as an efficient way to reward your employees with neither the staff or the business being liable for P.A.Y.E, P.R.S.I or U.S.C
Small Benefit Exemption Scheme
The once off payment of up to €500 tax free is under the small benefit Exemption scheme. Its a once off payment that is allowable annually so if you have not availed of this throughout the current year then it is advisable to use the small benefit exemption scheme before December 31st. The payable amount went up from €250 to €500 in 2016 making it even more beneficial to business owners. The payment must be a once off, non cash payment so using a voucher like one 4 all vouchers https://www.one4all.ie/ is advisable.
Conditions on Bonus
In order to avail of the once off tax free bonus their are a number of requirement which must be met.
The vouchers must be purchased from business funds in order to qualify under the small benefit exemption scheme. It is best practice to purchase the vouchers directly from the business bank account. If a voucher is purchased by an individual it cannot be accepted under the scheme and reimbursed.
If a bonus is paid in cash or via bank transfer, it does not qualify for tax free status under the small benefit exemption scheme. The bonus must be be made in voucher format and cannot be redeemable for cash. A voucher of any kind, such as for a restaurant, hotel or store, is perfectly acceptable. The One 4 All gift voucher is popular in this regard as it is redeemable in a large number of participating locations and as it is a voucher it does satisfy the conditions required for the small benefits exemption scheme.
Once per year
The one time bonus of up to €500 can only be made once a year. If a voucher of a smaller value has been given during that year then no further voucher can be given under the the small benefits exemption scheme.
The Voucher must be given as a bonus and cannot be in exchange for any salary earned. The bonus must be invoiced separately and should not be related in any way to payroll.
For more information on the small benefit exemption scheme or any help with your business accounts, please contact us via email to Info@taxpro.ie or call our Carlow office on 0599145992