Many business owners will be surprised to find that it’s possible to find ways to reduce costs and cheer up your workforce at the same time.
For employers looking to boost employee morale and improve productivity there are several small ways to offer employees a tax-free benefit without you or your employees suffering a tax liability.
The Small Benefit Exemption
You can give employees a small benefit of up to €1,000 in value, tax free, each year. This benefit must not be in cash. The most common form of benefit is a voucher, although benefits such as gym fees may also be included, provided they cannot be redeemed for cash.
Be aware however, the small benefit exemption cannot be used as a substitute for an employee’s pay i.e. a salary sacrifice. If you need more details on what constitutes a salary sacrifice, feel free to contact any member of our tax team.
Working from Home Benefit
Where employees are asked by their employer to work from home, the employer can make a tax-free payment of €3.20 per day to the employee to offset the costs of working from home.
Alternatively, the employee can make a claim to Revenue for tax relief on a portion of the costs incurred by them during the period that they worked from home. For 2022 and subsequent years you can claim 30% of the cost of electricity, heat and broadband (apportion based on the number of days worked from home during the year).
Bike to Work
Eco-conscious employers and employees can participate in the tax-free Bike-To-Work scheme. The purchase of a bike and the accompanying safety equipment by the employer for the employee is not a taxable benefit.
There are limits on the costs of the bicycle purchased. For cargo bikes, and e-cargo bikes the limit is €3,000, for e-bike or pedelecs, the limit is €1,500. For other bikes and related equipment, the limit is €1,250.
The purchase of the bicycle can be arranged as a tax-free benefit or as part of a salary sacrifice scheme over an agreed time, which cannot be more than 12 months.
