The Small Benefit Exemption Scheme Explained - Full Guide

Insights
Posted on 16 November 2022 Read time 3 mins
Author Sophia Whitham

The Minister for Finance of Ireland, Paschal Donohoe, recently published the Finance Bill 2022, which implements the taxation changes announced on Budget Day. While there’s a lot in the Finance Bill to unpack, one exciting change to the Small Benefit Exemption scheme makes it easier for businesses to reward their employees this Christmas or give them a welcome bonus during the cost of living crisis. 

 

In this guide, we’ll cover everything you need to know about the Small Benefit Exemption scheme, including what it is, how it’s changed and what these changes mean for Irish businesses and their employees. 

What is The Small Benefits Exemption Scheme?

Small Benefit Exemption (SBE) began as a simple Revenue concession until 2016, when the government enacted it under the 2016 Finance Bill. 

 

Today, the Small Business Exemption scheme permits employers to provide their employees with a non-cash bonus, reward, or incentive without needing to pay income tax, PRSI or USC on the payment. 

 


Under SBE, non-cash rewards and incentives can be purchased tax-free and are exempt from PAYE, USC and PRSI
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How Has The Small Benefits Exemption Scheme Changed?

 

In 2016, the limit for non-cash purchases under SBE increased from €250 to €500. This year, 2022, the limit for non-cash rewards and incentives purchased under the Small Business Exemption scheme rose again to €1000.

Importantly, this new increase to the SBE limit is in effect now, meaning businesses can use the total SBE amount during the Christmas gifting season. 

 

Moreover, you can also split the new maximum benefit amount of €1000 across two vouchers. That’s excellent news for businesses that have already gifted the previous maximum of €500, as they can now make an additional payment of €500 before the end of the financial year.

 


The SBE limit has increased from €500 to €1000 and is in effect immediately. Businesses can also split the maximum reward value across two vouchers
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Minister Paschal Donohoe said in his budget statement,

“I am increasing the annual limit provided for in the exemption from €500 to €1,000 and will also permit two vouchers to be granted by an employer in a single year under this exemption.”

 

“I propose that these changes will apply in the current tax year so that additional benefits can be paid this year if an employer wishes to do so.”

 

What Do These Small Benefit Exemption Changes Mean For Businesses and Employees?

 

Both businesses and their employees can benefit from the recent changes. Businesses can save up to €1313.54 per employee when gifting a non-cash reward worth €1000 net, while employees receive the full value of their bonus without needing to pay income tax on the additional income. 

 

With inflation hitting record levels, employer and employee budgets are being squeezed, so increasing the SBE limit to €1000 ensures everyone benefits from a little extra in their pocket. 

Using Gift Cards As a Part of Your Reward Strategy 

Utilising gift cards as a non-cash reward provides the ideal employee rewards and incentives strategy and fully complies with the Small Benefit Exemption Scheme.  It will also save you money and provide maximum purchasing power and choice to the people you’re trying to reward or incentivise.

 

If you’re stuck for inspiration, here are some ways to use the new benefit increase to reward the loyalty of your employees this Christmas period:

  • Give your employees the gift of choice with a Choice Link.

Give the gift of choice and let your employees choose how they want to split and spend their reward across all their favourite brands. Whether they need a helping hand with their weekly food shop, like to splash out on a new outfit, or indulge in a relaxing spa day, they can do it all with a Choice Link personalised to their individual tastes - from Delicious Dine Out to Fabulous Fashion, we’ve got it covered.

  • Gift your employees their Christmas dinner in the form of supermarket vouchers.

Help your employees with rising living costs by taking the pressure off Christmas dinner. Let your employees choose their favourite supermarket and split their rewards accordingly.

  • Reward your employees with spending power for seasonal sales.


Give the gift of shopping with a well-timed bonus positioned as extra spending power for the season's sales. Let your employees choose from their favourite brands with a Choice Link gift card and help them make their money go further.


Giving The Gift of Choice This Christmas

 

These changes to the Small Benefit Exemption scheme make it easier than ever for you to give back to your employees this Christmas with a digital gift card.   

 

Our innovative platform uses the power of digital gift cards to connect consumers to the brands they love, and with more than 2,000 brands in 16 currencies across 36 markets, we’re the fastest-growing network. 

 

So, if you want to make the most of the increase to the Small Benefit Exemption this financial year, give your employees the gift of choice this Christmas.  Learn more about how Tillo can help you do just that, click here



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