Tax Savings Calculations
As long as the 4 Rules are met, then the employee is not liable for PAYE, PRSI and USC on value of award AND the employer is not liable for employer PRSI (currently 10.85%) on value of award.
The exact savings depends on both the amount awarded (remember, it can be UP TO €500 not necessarily €500!), and the marginal tax rate that the particular employee is on.
To give some concrete examples of the savings available, below are some calculations based on four different salary levels, comparing a €500 reward through the Small Benefit Scheme with €500 net payment through payroll.
Tax Savings on Small Benefit Scheme
The total tax savings that your company can befit from depends on the total number of employees and how much of a tax-free reward you allocate to each employee. This table below gives potential total tax savings for different size companies-
Calculations based on –
- 2018 Budget figures
- Awarding full €500 per employee on Small Benefit Scheme
- Tax rate for single employee with normal allowances and tax credits
Download the Small Benefit Guide 2018
In the latest publication from Allgo, we provide the definitive guide to the Irish Revenue's tax-free reward scheme for Irish employers and employees. Download it for free today by clicking the Download Now button below.