Increase in threshold
From 2022 onwards the threshold is €1,000.
Under the Revenue Commissioner’s approved Small Benefit Exemption Scheme employers can provide employees with a small benefit, this small benefit is not subject to PAYE, USC or PRSI.
The following rules apply:
- The benefit or vouchers cannot exceed €1,000.
- It cannot be exchanged in part or in full for cash. (cash payments are fully taxable)
- Up to two benefits/vouchers can be given to an employee in one tax year.
- Where a benefit exceeds the threshold the full value of the benefit is subject to PAYE, USC & PRSI.
- The benefit or voucher cannot be part of any ‘salary sacrifice arrangement’ between the employee and employer.
‘salary sacrifice arrangement’ means any arrangement under which an employee forgoes the right to receive any part of his or her remuneration due under his or her terms or contract of employment and in return his or her employer agrees to provide him or her with a qualifying incentive’.
The small benefit is traditionally given as a voucher often at Christmas, as mentioned above only two such benefits can be given to an employee in one tax year as where a benefit exceeds the threshold the full value of the benefit is subject to PAYE, USC & PRSI.
Reference
Revenue Tax and Duty Manual