CORPORATE GIFT VOUCHERS

Under Irish Revenue’s Small Business Exemption Scheme, directors and employees can receive a non-cash bonus of up to €500 once a year. The most common way to avail of this is through vouchers. It is a tax-efficient way to reward your staff during the year or give a bonus this Christmas.

Provided certain guidelines are followed, neither your company nor your employees will pay PAYE, PRSI or USI, potentially saving a total of €653.65 in tax per employee. If you have yet to avail of the Small Benefit Exemption Scheme so far in the year, make sure you do before 31st December!

THE BACKGROUND TO TAXFREE VOUCHERS

In 2016, we saw the Small Business Exemption Scheme threshold double from €250 to €500. The tax-free vouchers are popular amongst companies who want to reward their employees with Christmas bonuses. There is no paperwork involved and no return 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 listed below are followed.

THE SMALL BUSINESS EXEMPTION SCHEME RULES

We have outlined the necessary guidelines below to help you qualify for the tax exemption:

• Must be purchased from business funds.

Tax-free vouchers must be purchased from the business bank account or credit card. It is important to note – directors or employees cannot purchase a voucher themselves and seek reimbursement from the company.

• Once per year

The scheme can only be availed of once per year. Only one tax-free voucher can be paid to an individual in any one year, even if you do not avail of the maximum annual allowance of €500. If more than one bonus is given in a year, it is only the first one that will qualify for tax-free status.

• Non-cash format

The benefit must be provided in a noncash format e.g. gift voucher, which cannot be converted into cash. As the payment must be in a non-cash form, the most common way to avail of this scheme is by purchasing gift vouchers.

• A salary sacrifice is not allowed

You cannot fund the scheme from a deduction from your employee’s salary. You must get invoiced for the rewards and pay this external to payroll.

If you want to discuss our corporate gift vouchers you can email our team – info@texassteakout.com