Gift Cards and Vouchers – a simple way of giving your staff a bonus without having to pay Tax/PRSI/USC
Gift vouchers are a simple way of giving bonuses and rewarding performance, and in the Republic of Ireland, they are tax efficient for both employee and employer.
The tax savings arise from the Small Benefits Scheme under which employees are allowed to receive non-cash bonuses or benefits from their employers without paying tax on it. In last years budget (2016), the limit was increased from €250pa to €500pa effective from 22nd October 2015, making the scheme an even more attractive proposition.
You need to be aware that the change limits the scheme to vouchers only – previously it applied more broadly to non-cash items e.g. hampers and other gifts. Other important points to note are that the payment must be a “once-off annual payment” – you cannot give a €100 voucher in June and another €150 in December, in those circumstances only the first voucher gets relief – and, if you exceed the limit e.g. give a €600 voucher, then the full amount is subject to PAYE and PRSI – you don’t get relief for the first €500. But follow the rules and gift vouchers are an excellent tax efficient way of rewarding employees.