End-of-Year Employee Rewards: A Guide to Tax-Free Options
As the year draws to a close, many businesses consider options for rewarding and recognising employees' contributions.
Eimear Redmond, Manager, Field Sales at One4all Rewards stated “Through the Small Benefit Exemption Scheme you can gift an employee up to €1,000 tax-free, thanks to the BIK limit. This means businesses can reward their employees with up to €1,000 this year in Gift Cards, exempt from tax, PRSI, and USC charges, potentially saving up to €1,313.54* per employee. The maximum reward of €1,000 can be split across two payments in one financial year.
The small business exemption is a fantastic opportunity for business owners to boost employee morale and reduce costs simultaneously. As Christmas approaches, the scheme allows businesses to offer employees tax-free benefits while potentially saving costs for the organization. The small business exemption can be paid in Gift Cards or Vouchers, Prepaid Debit Cards (non-reloadable/redeemable for cash) and Non-Cash Benefits, such as tangible gifts (e.g., electronics, hampers), as long as their value does not exceed the exemption limit. We are simply referencing One4all as an example as they are long-time supporters of the SFA. Other providers are also available.
Budget 2025 saw some changes to the Small Benefit Exemption. From 1 January 2025 the number of annual vouchers or benefits is increasing from the first two to the first five and the exemption limit is increasing from €1,000 to €1,500. However, with the small benefit exemption set to cease 2030, the SFA has been engaging with key political stakeholders about extending the small business exemption beyond 2030. When the new Dail sits, the SFA will resume its discussions and will also liaise with key Department officials to monitor developments.
*Figure of €1,313.54 is based on giving €1,000 net to an employee on the 40% tax band paying full PRSI and USC.
For more information on One4All, email rewards@one4all.ie or visit www.one4allrewards.ie.
For more information on BIK please contact SFA Public Affairs Lead, Jonathan McDade - Tel: 01 605 1688 or Email: jonathan.mcdade@sfa.ie.
