Employment Benefits – Small Benefit Relief

Benefits from employment

There are two types of benefits an employee may get in addition to salary:
  • Benefit-in-kind (BIK) - any benefit that has a monetary value but cannot be converted into cash, e.g., company car, loans etc.
  • Benefits (other than benefits-in-kind). E.g., vouchers, prizes etc. 
All employees whose total income is more than €1,905 (including benefits) per year pay tax on the value of any benefits and benefits-in-kind. Regardless of their total income (even if less than €1,905), a company director must pay tax on any Benefit-in-kind.  Tax must be paid on any benefit given to an employee’s spouse or civil partner, family members, dependants or guests.   Taxation of benefits (other than benefits-in-kind) is made on the value of the benefit. E.g., an employer gives an employee a one4all voucher worth €1,000. The €1,000 is treated as income for tax purposes.  However, there are certain rules that apply to certain benefits/benefits-in-kind that may reduce the tax liability. Some benefits that an employee can receive that are not subject to tax or can be received tax efficiently, include the following (conditions/restrictions can apply to these exemptions), travel passes, bicycle and safety equipment, canteen facilities, mobile phones, computer equipment, cars, vans, etc.   

Benefit - Small Benefit Relief 

  An employer can give an employee two small non-cash benefits up to the value of €1,000, tax-free each year.    It is important to note that; 
  • The total value of one or two non-cash benefits can only be up to €1,000, if one non-cash benefit exceeds €1,000 the full benefit is subject to tax, if it is two non-cash benefits that exceed €1,000, the second benefit is subject to tax
  • Two small benefits up to the value of €1,000 are permitted per year, subsequent benefits will be subject to tax even if the total amount is less than €1,000 
  • It must be non-cash e.g., voucher, gift card. If cash, it is subject to tax
  • Cannot be redeemed for cash, it must be used to purchase goods or services, if redeemed for cash it is subject to tax 
  • Unused allowance amounts cannot be carried forward 
  • The gift card or voucher must be outside the normal payroll, it cannot be a salary sacrifice
  • The employer does not have to give the full €1,000 benefit, any amount up to €1,000 is allowable
  • Both full-time and part-time employees can receive the benefit
  Please note that the above information is valid as of 7th September 2022, these are general comments only and should not be taken as advice. No actions should be taken or not taken in light of the above. If required, advice should be obtained under the terms of an engagement letter