Revenue benefits for your employees to avail of
Q I am looking at rewarding my employees for next year, can you advise me on allowable Revenue benefits that I can avail of?
A A very good way to reward your employees and retain them is by considering the benefits available that is tax beneficial for both the Employer and the Employee. Here are a few allowable benefits for you to consider:
The Small Benefit Exemption Scheme was increased in last year's budget from €250 to €500. This means that employers can reward each employee in 2016 up to €500 completely tax-free.
Here are three key things to bear in mind:
1. The Bonus Must Be Paid in Non-Cash Form
To avail of the tax benefit of the Small Benefit Scheme, the benefit must be given in non-cash form. Employers can elect to give shopping vouchers or multi-retailer gift cards like One4All.
2. Only One Reward per Year is Tax-Free
Only one such benefit can be given to an employee in any one tax year, even if you do not utilize the full €500 allowance.
3. It Benefits Both the Employer and the Employee
The Small Benefit Scheme allows both the employer and the employee to save tax. The employer saves Employer PRSI at 10.75% of the reward (compared to paying it through payroll), and the employee saves 100% of the PAYE and USC that would normally be deducted at source. The combined tax saving is potentially as high as €653.65
Pension Contributions: PAYE and PRSI should not be applied to pension contributions paid by an employer in respect of an employee to Revenue-approved pension schemes and Personal Retirement Savings Accounts (PRSA's).
However, while PAYE and PRSI do not apply to an employer's contribution to an employee's PRSA, the contribution is nevertheless a taxable benefit in the employee's hands, subject to relief up to certain limits, and must be returned by the employer on form P11D.
Meals and Meal Vouchers: A taxable benefit does not arise in respect of free or subsidised meals in staff canteens where meals are provided for the staff generally. The facility must be available to all employees. Otherwise, the exemption does not apply. In the event that a taxable benefit does arise, the running costs must be apportioned, in a reasonable manner between those employees entitled to use the canteen, and taken into account as notional pay for PAYE and PRSI purposes. No cost should be attributed to an employee who specifically indicates that s/he does not wish to, and does not use the facilities provided.
Sports and Recreational Facilities: Where sports and recreational facilities are made available on the employer's premises for the use of employees generally, a taxable benefit is not treated as arising. The facility must be available to all employees. Where the facilities are not available to all employees there is a taxable benefit.
Medical Check-ups: The provision of one medical check-up per annum at the expense of an employer will not be regarded as a taxable benefit. The provision of medical check-ups which employees are required to undergo by their employer will not be regarded as taxable benefits.
Other benefits to consider are Company Shares, Crèche/Childcare Facilities, "En Bloc" payments, Staff discounts, Car parking, Laptops and computers and course and exam fees
For further information on the other benefits in kind for your employee's log onto http://www.revenue.ie and search other benefits.