The Small Benefit Scheme (SBS) is a statutory tax relief scheme offered by Irish Revenue that allows employers to provide a tax exempt benefit to Irish employees of up to €500 per year.
As an employer, the Scheme allows you to give certain types of rewards to your employees that are NOT subject to any Benefit-In-Kind (BIK) tax for the employee, or employer tax (Employer PRSI) for the company. To provide tax-free rewards to your employees under the Scheme, you must adhere to 4 basic rules:
Rule#1: Maximum €500
The reward cannot exceed the threshold, which is currently €500 per employee per year. The employer can award a lower amount than €500, or different amounts to different employees, but any employee receiving more than €500 will not qualify for tax-relief. In fact, rewards over €500 are subject to BIK on the entire amount!
Rule#2: One Reward Per Year
The benefit or reward can only be given once per year in a single award. As the tax year in Ireland runs from January 1st to December 31st, this means that if an an employer makes an award to an employee in January, then the full year’s €500 BIK relief is used up for that employee in January, even if the reward is less than the €500 threshold.
Rule#3: Non Cash
The benefit must be in non-cash form that cannot be converted into cash. This means that it cannot be paid through payroll, or for example on any company expense credit card that could be used at an ATM to withdraw cash.
Rule#4: No Salary Sacrifice
The benefit cannot be funded from a deduction in salary from the employee, so the company needs to be invoiced for the total amount, and needs to pay for the total value of the rewards from the company's own funds.
Guide to Small Benefit Scheme 2019
Our 2019 Expert Guide to the Irish Revenue’s tax-free employee reward scheme gives you expert info, insights and case studies for getting the most out of the scheme. Download it for free today by clicking the Download Now.