The Small Benefit Exemption: the easiest way to make recognition go further (for you and your people)
In Ireland, there’s one little-known tax perk that has a hugely positive impact on employee morale and employer cost-savings - and honestly, more companies should be using it.
It’s called the Small Benefit Exemption and it’s one of the most flexible, feel-good, high-impact ways to reward your people… totally tax-free. And yes it’s 100% Revenue-approved.
If you're looking to reward and recognise your team in a cost-effective way, here's all you need to know about the Small Benefit Exemption scheme in Ireland.
What is the Small Benefit Exemption Scheme?
The Small Benefit Exemption is a tax-relief scheme in Ireland that lets employers give employees up to five non-cash rewards up to €1,500 in total value completely tax-free every year.
How does the Small Benefit Exemption work?
Employers have the full flexibility to decide how to allocate the rewards. You can choose to give one reward of €1,500 or a few different rewards (but up to five a year) as long as the combined value doesn’t exceed the €1,500 amount.
The following rules apply:
- It must be non-cash: Vouchers, prepaid cards, store cards, experiences - yes. Cash or rewards that can be redeemed for cash - no.
- It’s per tax year: January to December. Most companies use it at year-end or Christmas.
- All employees can receive it: No hierarchy. No seniority requirement. If you employ them, you can reward them.
- Up to five rewards per year: As long as the combined total does NOT exceed €1,500. If you provide more than five rewards, only the first five get tax-free treatment.
The Small Benefit Exemption's benefits for employers and employees
The Small Benefit Exemption scheme provides benefits for both employers and employees. Rewards or cash bonuses not given under the Small Benefit Exemption are subject to taxes both from the employer and the employee side.
Under the Small Benefit Exemption, employers save on tax costs while employees receive the full reward value to spend as they wish.
Let's look at a practical example: say you want to reward someone with €1,500.
Through payroll:
Between tax, USC and PRSI, that €1,500 could land you closer to half that value in total costs. You also pay employer PRSI. This makes your total estimated costs around €3,481.
Under the Small Benefit Exemption:
The employee gets a clean €1,500 to spend, and you avoid the extra payroll tax. This means you only pay the reward value of €1,500 and save close to €1,981.
That is smart, modern recognition in action. We also have a free tax savings calculator, so you can compare the cost of employee reward in seconds.
Why employees love it:
- A genuine boost to buying power.
- More value than a taxed cash bonus.
- And it feels like a reward, not a payslip line item.
Why employers love it:
- Lower cost to deliver meaningful appreciation.
- Simple to administer.
- Zero complexity.
This is especially powerful for SMEs where every budget decision needs to count.
What types of rewards qualify under the Small Benefit Exemption Scheme?
The most important thing you need to remember is that the rewards must be non-cash.
Here are a few examples of rewards that qualify:
- Retail gift cards (groceries, clothing, lifestyle)
- Prepaid debit cards (with anti-cash restrictions)
- Restaurant / hotel / experience vouchers
And since the scheme lets you give each employee up to five different rewards, you can mix and choose things that people genuinely like to thank them consistently and frequently throughout the year.
Reporting Requirements
While rewards given under the Small Benefit Exemption are not taxable, you still need to report them with Revenue. The information you need to provide is the date and amount of the reward.
Another thing to keep in mind is that if you provide more than five rewards, or if the total value exceeds €1,500, the entire value of the final payment in excess is taxable.
Workbloom’s tax reporting feature makes this easy. Every reward you send through Workbloom is automatically tracked while the smart reporting capabilities let you see when you are close to reaching the Small Benefit Exemption limits.
Here's an example:
If you want to see Workbloom's tax report in action, book a free demo today!
Making recognition matter and last
Work is more human when people feel seen. The Small Benefit Exemption isn’t just a tax feature, it’s a simple, smart lever to create joyful, meaningful, motivating moments.
It’s a tool that lets HR be strategic and positive - not simply compliant. And in a world where budgets are tight, expectations are high, and talent is mobile, the Small Benefit Exemption is one of the most credible, modern ways to boost morale while protecting cost.
This is where innovation meets impact. This is how you build a culture where appreciation shows up - clearly, tangibly and tax-free.
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