Can you use the Small Benefit Scheme to pay bonuses tax-free?

Small Benefit

Yes, you can, as long as the bonus is discretionary and does not form part of the employee’s contractual remuneration package (i.e. specified in the employment contract).

Discretionary bonuses qualify for the Small Benefit Scheme but contractual remuneration does not (as salary sacrifice is not allowed).

Also, the limits of the Scheme mean that a maximum of 5 tax-free bonus rewards can be given in any one year up to €1,500 combined. This may cover some, but not all, of the bonus amount so anything over the limit would need to be paid via payroll subject to normal tax.

For more details, and to download a comprehensive pdf guide, please visit our Small Benefit page.

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