The Small Benefit Exemption – Gift Cards
As the weather begins to finally take a turn towards the colder, darker Winter mornings, thoughts naturally begin to turn towards the big man in red visiting at Christmas. As recent times have been so “unprecedented” and we now find ourselves in the midst of a cost of living crisis it is easy to overlook the positive emotions of this upcoming season and find yourself awash in a sea of concerns.
As we discussed recently in our note on Budget 2023, there is one new way that employers can assist employees financially without either party incurring tax issues. The Small Benefit Exemption has been a long-standing benefit offered from employers to their staff which allowed staff to be gifted a €500 gift card on which neither party would be taxed.
In the recent Budget, it was announced that the limit on this gift would be increased to €1,000 and there would be an allowance of 2 gifts not exceeding the combined €1,000 per year tax-free. If more than 2 gifts are given over the course of a year, only the first two gifts will qualify for tax-free status. This gift is required to be in the form of a gift card and is not permitted to be converted into cash, and any unused allowance cannot be carried over into the following year.
This change will be a welcome one for employees who receive these gifts each year, and will likely go a long way towards offering some relief over the Christmas period during this current financial crisis, while also offering employers taxation relief. It is worth noting that if the given gift exceeds the €1,000 limit, the total amount will be subject to PAYE, USC and PRSI, and not just the exceeding amount.
We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us.