Irish businesses are passing up €400m in potential tax-savings each year on the €500 Small Benefit Scheme.
The €500 Small Benefit Scheme allows Irish employers to reward employees up to €500 per year without incurring any BIK for the employee or PRSI for the employer. However only a small percentage of this potentially huge tax break is being availed of by Irish businesses.
This missed opportunity for Irish businesses can be illustrated by the following 3 figures-
1. €590m
If all Irish employers fully availed of the Small Benefit Scheme (ie issued a €500 gift voucher to all their employees), the total annual tax saving would be €590 million per year.
This is based on 2.4m employed people in Ireland, with 35% of those being tax exempt, 44% on the lower income tax rate, and 23% on higher income tax. The average tax saving for lower income tax rate on the Small Benefit Scheme is €265. For those on the higher tax rate, the figure is €618. So when you work out the maths on this, the total potential tax saving is €590m.
2. 53%
Only 53% of Irish companies actually avail of Small Benefit Scheme. This is based on the AllGo HR Trends Survey in 2020.
3. €300
€300 is the average gift card that Irish employees receive on the scheme, based on sales of AllGo’s Mastercard Gift Card in 2019 and 2020.
The combined effect of only 53% of Irish business availing of the Small Benefit Scheme, and for those that do avail of it, the average amount being rewarded is only €300 out of a maximum €500, means that the annual tax savings on the Small Benefit Scheme is only €188m. Therefore €402m in tax-saving is being missed each year!
