Jack Chambers (Dublin West, Fianna Fail)
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Under the “Small Benefit Exemption”, an employer may provide, to each of their employees, up to two small relevant incentives (that is, a voucher or benefit) per year of assessment which will be exempt from Income Tax, PRSI and USC, provided all of the conditions contained within section 112B of the Taxes Consolidation Act 1997 (TCA) are satisfied.

The main conditions for the exemption are as follows:

• the incentive is provided in the form of a voucher or other non-cash item (benefit),
• where the incentive provided is in the form of a voucher, this voucher must only be for the purchase of goods or services and must not be capable of being exchanged in part or in full for cash,
• the aggregate value of the incentive(s) does not exceed €1,000 in a year of assessment, and
• the incentive does not form part of a salary sacrifice arrangement.

Where all of the conditions above are not satisfied, the exemption does not apply and the benefit is subject to tax in the usual way through the payroll, in accordance with section 112 TCA.

However, I announced in Budget 2025 that the number of relevant incentives that an employer can provide will be increased to five per year of assessment and the maximum cumulative annual limit will be increased from €1,000 to €1,500. These changes are provided for in section 8 of Finance Bill 2024.

As the Deputy may be aware, section 897C TCA, inter alia, provides for the mandatory reporting to Revenue by employers who provide relevant incentives under the Small Benefit Exemption. As such, since 1 January 2024, employers are obliged to report the value of the benefit and the date the benefit was provided to the employee on or before the date the benefit is provided. However, as the nature of the voucher is not reportable, it is not possible for Revenue to provide a breakdown of the most commonly used vouchers.

As outlined, the relevant incentive must be a voucher or non-cash benefit. Cash is an emolument to which PAYE/PRSI must be applied. It is not intended that the exemption should be used as a form of salary substitution in order to avoid or reduce the payment of PRSI and income tax.

Further information on the Small Benefit Exemption is available on Revenue’s website at the following link:

www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/valuation-of-benefits/small-benefit-exemption.aspx.