With up to €500 per employee tax-free, the Small Benefit Scheme is increasingly popular among Irish companies of all sizes. Since 2015, when the tax-free limit was doubled from €250 to €500, more and more companies have started paying bonuses and other non-salary rewards through the scheme - not surprising when you see the savings involved-
The most common method for availing of the scheme is through gift cards and vouchers, because they qualify for the scheme while giving employees choice on where to spend them. There are several specialist gift voucher products on the market offering mulit-relatailer redemption, including the Allgo Rewards Universal Gift Card.
While the Small Benefit Scheme is designed to be an easy scheme to administer - e.g. there are no returns at all to be made to Revenue - for larger companies especially it is important to choose a gift card provider that can minimise the internal admin for the company with the scheme.
From experience, the key considerations to minimise admin are-
- Same Gift Card Value
The easiest way to cut down on admin is to award every employee the same value gift card (up to €500 to qualify for the scheme). When the gift cards are delivered, it’s simply a case of distributing one envelope to each employee.
- Reward Bands
More often than not, companies want to allocate different reward amounts to different groups (perhaps based on longevity or seniority). In this case, it is important that your gift card provider can deliver their gift cards grouped into the different values and label them accurately – either with the actual card value or with the group name. For example, Allgo delivers its gift cards in envelopes with the company logo and managers’ names on the label with the card value printed discreetly on either the inside.
- Individual Employee Rewards
If each employee is to receive a specific reward amount, then the company will need to provide a spreadsheet with the employee names and gift card values. In this case, the gift card provider should present the gift cards with the employee name printed on the outside and the card value on the inside of the gift card envelope to prevent any unwanted comparisons between staff.
- Delivery Locations
Normally gift cards are delivered centrally in bulk and then distributed internally by the company. If a company has multiple locations, it is worth requesting that the gift card provider delivers by location to make internal distribution easier and quicker. While most providers charge per delivery, the costs are normally minimal.
- Delivery Date
It is important to decide on a delivery day that will suit the company and ensure that the cards are delivered exactly on that day. For example, many companies don’t want to have gift cards delivered on a Friday, as they would then need to store them securely over the weekend before they can be distributed to staff. Ensure your provider can guarantee delivery on the day you select.
Because the company is funding the tax-free reward (salary-sacrifice is not allowed!), it is important that the employee is fully aware of the company benefit. A great way to do this is to include company branding – either of the gift card itself or on the card carrier or envelope the card is presented in. Allgo for example offers multiple options for card branding, and costs can be minimal depending on the option chosen and the quantities involved.
- Reward Message
Often, it is highly desirable to include a message from the MD / CEO with the tax-free reward, thanking the staff for their contribution to the company, and linking the reward to the company’s success. While it is possible to include a personalised letter with each gift card, most companies save on admin by having the MD / CEO broadcast a company-wide email to all employees on the SAME DAY as the gift cards are given out.
About the Small Benefit Scheme
The SBS is a statutory tax relief scheme offered by Irish Revenue that allows employers to provide a tax exempt benefit or reward to Irish employees of up to €500 per year without any tax liability.
That means that the employer saves the 10.85% employer PRSI that they would otherwise be liable for if the reward was put through payroll. The employee saves on all USC, PRSI and PAYE at their marginal rate.
For more about the Small Benefit Scheme, download our definitive guide -