Where the gift or voucher exceeds €1,000, the full value is subject to PAYE, USC and PRSI. The benefit cannot be part of a salary sacrifice arrangement.
In order to maximise the tax-free allowance, provide each employee with two instalments of €500 per year.
No. However, if you exceed the €1,000 limit, or give the benefit in more than two instalments, they will be taxable.
Employers can make considerable savings by using the exemption to reward their employees.
If you were to put a bonus of €1,000 through payroll for an employee who’s on the higher tax band and pays PRSI and tax, it would cost your business €2,313.54.
By using the exemption, you can make potential savings of up to €1,313.54 per employee compared to putting it through payroll.
Any employee on your company’s payroll – both part time and full time – who pays PAYE income tax, PRSI and USC can benefit from the scheme. How much they save in taxes depends on the tax rate they’re on and what level of USC and PRSI they pay.
Your employee receives the full value of the bonus, which they can use as they wish.
Using the scheme is straightforward. There is no need to file a return or make adjustments to payroll.
The employer gives each employee their mobility budget allowance vouchers, and the invoice is treated as a fully deductible expense. Instead of using the payroll system, it is recorded as a ‘non-taxable benefit’.