Would you like to know how directors and employees can be paid up to €500 tax-free? 

Under Irish Revenue’s Small Benefits Exemption Scheme, employers can reward employees with a non-cash bonus of up to €500 in value completely tax free each year (the limit was increased from €250 in the Budget passed in Oct 2015).

Provided certain guidelines are followed, neither the company nor the employee will pay PAYE, PRSI or USI, potentially saving €653.65 in tax (see table below).

To qualify for the tax exemption, only one tax-free bonus may be paid to each employee in any one year. If more than one bonus is given in a year, it is only the first one that will qualify for tax-free status, even if this bonus is less than the €500 annual allowance – any used allowance cannot be carried over. The tax-free bonus must also be paid in non-cash form.

If you haven’t availed of the Small Benefit Exemption Scheme so far this year, make sure you do before 31st December!