Budget 2019 was announced last week, and was relatively uneventful overall.
In relation to the Small Benefit Scheme, it was a case of no news is good news. The limit of €500 has remained unchanged and therefore, employers can reward staff tax-free at the same amounts as last year.
The following changes to income tax and Employer PRSI mean that the tax-saving calculations on the Small Benefit Scheme have changed slightly. While USC will be reduced for employees earning between €19k and €70k, and the lower rate tax band will be increased by €750 (for single people), the increase in Employer PRSI by 0.1% means that the overall tax-savings available for on the Small Benefit has marginally changed.
Income Tax Changes affecting Small Benefit Calculation-
- Employer PRSI increases to 10.95% for all employees
- Single income lower tax band increases by €750 from €34,550 to €35,300
- 3rd USC band reduction from 4.75% to 4.5%
- 2nd USC ceiling rises from €19,372 to €19,874
The changes to income tax in Budget 2019 means that the tax-saving calculations for the Small Benefit Scheme change too.
However, as the table below shows, the net affect on the Small Benefit Scheme is marginal, with only a few euros in difference between the tax-savings in 2018 and those in 2019:
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