In a word, NONE! Neither the employer nor the employee need to make any specific return to revenue when using the €500 Irish Revenue Small Benefit employee reward scheme.
As long as the 4 Key Rules of the Scheme are met, you can reward your employees without any Benefit-In-Kind (BIK) tax-liability for the employee, or for the business.
The 4 Scheme Rules are-
- Non-Cash Reward
- Salary Sacrifice is not allowed
- Any value up to €500
- One Reward / 1st Reward per Year
A great advantage of the Small Benefit Scheme is that it is so straightforward to administer for companies. There is no payroll adjustment or Revenue return to be made to avail of the Scheme.
Employers are simply invoiced by the reward provider for the total value of tax free rewards. This invoice is treated as a normal business overhead for accounting purposes, and there is no need to adjust payroll calculations in any way. Similarly, employees receiving rewards under the Scheme do not need to make any additional Revenue returns or even include it in any normal return.
For any subsequent Revenue tax audit in the company, it may be beneficial to have a record of the employees that received tax free rewards and the amounts they received under the Scheme.
However, this is NOT currently a requirement, and in practice, Irish companies can simply demonstrate that the invoice for the total amount of rewards purchased did not exceed €500 x No. of Employees employed at that time.
In summary, while NO RETURNS and NO PAYROLL adjustments need me made on a correctly administered Small Benefit Scheme, it is recommended that companies record the payouts made on reward programmes, and internally check that the combined rewards made adhere to the scheme rules each year, so that this documentation can be shown to Irish Revenue for any possible future company audit.
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.