Budget 2020 Update: Small Benefit Scheme

Posted by Gary Purcell on Oct 9, 2019
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Budget 2020, announced yesterday by Finance Minister, Paschal Donohoe, made no changes to the thresholds or rules for Small Benefit Scheme.

So for 2020, as in 2019, Irish employers will still be able to reward employers up to €500 per year without any Benefit-In-Kind (BIK) tax for the employee, or employer tax (Employer PRSI) for the company. The 4 Core Rules of the Scheme remain in force-

  1. Non-Cash Reward
  2. Salary Sacrifice is not allowed
  3. Any value up to €500
  4. One Reward / 1st Reward per Year

Tax- Saving Calculations
With minimal change to the key Employee taxes, the savings available on the Small Benefit Scheme in 2020 will be very similar to 2019:

Small Benefit Tax Savings - by Employee SalarySmall Benefit 2020 - Tax Savings by Salary

Small Benefit Tax Savings - by Company SizeSmall Benefit 2020 - Tax Savings by Company Size

Tax-Savings Calculations based on –
• 2020 Budget figures
• Awarding full €500 per employee under the Small Benefit Scheme
• Tax rate for single employee with normal allowances and tax credits as follows

Income Tax
- 20% PAYE up to €35,300
- 40% above that

Employee PRSI
- Under €18,304 = 0%
- 4% above that

USC
- First €12,012 salary @ 0.5%
- Next €7,862 salary @ 2%
- Next €50,170 salary @ 4.5%
- Balance of salary @ 8%

Employer PRSI
- Under €20,072 = 8.7%
- 10.95% above that.

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.

Small Benefit Scheme 2019_Cover_Transparent700x400

The Expert Guide to the €500

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.

  • Small Benefit Rules 2019
  • Tax Savings Calculations 2019
  • Most Popular Tax-Free Rewards
  • Paying Bonuses Tax-Free
  • Tax Returns & Revenue Audits
  • Extending the Scheme Year Round
  • Other Employee Reward Tax Schemes
  • Small Benefit FAQs
  • Case Studies

Click here to Download Guide

 


 

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