The tax-free value of employer vouchers, and the cash it replaces.
Tax-free amount
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Gross cash to match
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Total saving vs cash
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Your breakdown
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The most tax-efficient euro an employer can give
The Small Benefit Exemption lets an employer hand a worker up to 1,500 euro a year in non-cash benefits, almost always vouchers, with zero income tax, zero USC, and zero PRSI on either side. Nothing else in the Irish payroll system comes close. A 1,500 euro voucher costs the employer 1,500 euro and lands 1,500 euro in the employee’s pocket. Trying to deliver the same 1,500 euro net through salary costs the employer a great deal more, because pay is taxed.
Two conditions matter. The benefit cannot be cash or anything redeemable for cash, which is why it is paid in vouchers or gift cards. And while Revenue allows the exemption to be made up of as many as five separate benefits in a year, the total is capped at 1,500 euro. This tool works from the total value you enter and applies that cap, so the count of vouchers does not change the arithmetic, only the policy limit on how many you can stack.
Why a 1,500 euro voucher beats a pay rise
Consider an employee on the 40 percent higher rate, with 8 percent USC at the top band and 4.1 percent employee PRSI. To leave 1,500 euro net in their hand through salary, the employer must pay enough gross that survives a 52.1 percent deduction. That gross is 1,500 euro divided by 0.479, which is 3,132 euro. On top of that the employer pays its own 11.15 percent PRSI on the gross, which the voucher route avoids entirely.
The chart contrasts the cost of the two routes. The voucher delivers the same net reward for less than half the total cost of grossing it up through payroll.
Getting the timing and the cap right
The exemption applies to the first qualifying benefits in the year, up to the 1,500 euro ceiling. That ordering rule catches employers who give a small token in spring and a larger reward at Christmas: if the spring voucher used part of the allowance, the Christmas one only gets what is left tax free, and any excess is taxed as normal pay through payroll. The cleanest approach is to plan the full 1,500 euro in one or two benefits rather than dribbling small amounts across the year.
A point that often gets missed: this is per employer, not per job in the household. A couple who both work can each receive 1,500 euro from their own employers, so a household can see 3,000 euro of tax-free benefits in a year. The exemption also cannot be funded by a salary sacrifice. If an employee gives up wages in exchange for the voucher, Revenue treats the whole thing as taxable pay, defeating the purpose.
Employer questions
Can directors and proprietary directors claim it?
Yes. Company directors, including owner-directors, are employees of the company for this purpose, so a director can receive the 1,500 euro tax-free benefit just like any other staff member, provided the benefit is genuine and not cash.
What if I give a voucher worth more than 1,500 euro?
Only the first 1,500 euro is exempt. The excess is treated as pay and taxed through PAYE, USC and PRSI in the normal way. So a 2,000 euro voucher leaves 500 euro taxable, which usually wipes out most of the benefit of the extra amount.