The Small Benefits Exemption provides that, in general, where an employer provides an employee/director with a small benefit (that is, a benefit with a value not exceeding €500), PAYE, USC and PSRI need not be applied to that benefit. This treatment does not apply to cash payments, which are taxable in full. The benefit can be used only to purchase goods or services and cannot be redeemed for cash.
No more than one such benefit given to an employee in a tax year will qualify for such treatment. Where a benefit exceeds €500 in value the full value of the benefit is to be subjected to PAYE, USC and PRSI.
I am advised by Revenue that where an employee is in receipt of such a non-taxable benefit, the employer is not required to report the details to Revenue. Therefore, it is not possible to provide definitive numbers of employers and employees involved, the potential tax cost foregone or to estimate the cost of increasing the €500 annual limit. The Department included a tentative estimate for the purpose of the Budget 2020 Tax Expenditure Report.
