The Small Benefit Exemption allows employers to offer non-cash benefits to employees without incurring tax liabilities. For 2024, employers can provide up to two tax-exempt benefits with a combined value of €1,000 per employee annually. However, in 2025, the rules will change, allowing employers to offer up to five non-cash benefits, with a total value of €1,500. These changes were confirmed in the recent Finance Bill and are set to take effect from 2025. 

Regarding the best way to pay a Christmas bonus, leveraging the Small Benefit Exemption could be particularly advantageous. Instead of a traditional cash bonus, employers can provide non-cash benefits such as gift vouchers or extra leave days, allowing for a tax-free reward that employees will appreciate.  

How can I issue the bonus?

This bonus must be provided in the form of a voucher, which can only be redeemed for goods and services, not for cash. Previously, an employer could only issue one voucher per year. However, this has been updated, allowing for two vouchers to be given annually.  

The most commonly used method to utilise this scheme is through One4all Gift Cards.  

Looking to outsource your Financial Functions?

Reach out to Gallagher Keane for expert support in payroll, tax compliance, and financial outsourcing. Let them help you manage your resources efficiently while rewarding your team this Christmas! 

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