Want to reward your employees this Christmas with a tax-free gift voucher? Ensure you avail of Revenue’s small gift concession.
What is the Small Gift Exemption?
The Small Gift Exemption is a Revenue concession, where employers can gift their employees an amount that must not exceed €250 per annum and NO income tax liability will arise.
Is the gift voucher taxable to the employee ?
No, provided the conditions are met, the employee does not pay any tax on the €250 voucher. This represents a tax saving of approximately €270 for the employee on the top tax rate.
Will the gift be subject to Universal Social Charge or PRSI?
No, where the single non cash award does not exceed €250 in the year, no USC or employee PRSI will apply. The employer also benefits, as the gift will not be liable to employer’s PRSI, which in most cases results in a tax saving for the employer of 10.75%
What exactly can an employer gift?
In order to avail of this exemption, the employer must gift or award an employee with a single non cashaward. Therefore, items such as gift vouchers or hampers are ideal awards to gift your employees. Cash, cheques, Postal orders etc are not allowed.
Does the exemption cover all gifts in the year from your employer?
No, the relief only applies to a once-off gift in the year. For example, an employer may gift an employee with a €20 voucher every so often. The first voucher is covered under the exemption, however, all subsequent vouchers must be taxed in the normal manner through payroll as a Benefit in Kind.
It is important therefore that only a single once off gift is made to the employee in any year, which does not exceed €250.
What happens if a company raffle or draw is held for employees and an employee receives a non-cash prize?
A taxable benefit will arise in these circumstances. However, where the prize is in a non-cash form, the value is less than €250 and no other non-cash benefits has been received by that employee during the year, the prize is then covered by this exemption.
My employer sometimes provides my family members with small gifts, are these exempt also?
No! Where your employer provides benefits toany member of your family or household, these benefits are taxable in full and cannot be relieved under this small gift exemption.
The above information should be treated as a guide only. If you would like assistance with your tax affairs, please contact Coll & Co Chartered Accountants, Barna phone on 091-592080 or by email at firstname.lastname@example.org.