Small Benefit BIK Exemption

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podgerodge

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I am aware of the Eur250 small benefit BIK exemption currently allowed. My employer states that as the payment to staff each christmas is not a gift but a "bonus" based on a performance review, the exemption does not apply and the 250 is fully taxable.

Any ideas?
 
Isn't the small benefit BIK exemption threshold actually €100 and not €250? See section 2.3 of the Revenue [broken link removed]. The guide makes no mention of this payment needing to be a gift. However if that is a requirement then maybe you can convince your employer to pay €100 of it as a gift rather than as salary (assuming that this is legitimate)? On the other hand, in the greater scheme of things (e.g. in relation to total annual earnings) the benefit is likely to be marginal.
2.3 Small benefits

Where an employer provides an employee with a small
benefit (that is, a benefit with a value not exceeding
€100) PAYE and PRSI need not be applied to that
benefit. No more than one such benefit given to an
employee in a tax year will qualify for such treatment.
Where a benefit exceeds €100 in value the full value of
the benefit is to be subjected to PAYE and PRSI.
Click to expand...
 
podgerodge said:
I am aware of the Eur250 small benefit BIK exemption currently allowed. My employer states that as the payment to staff each christmas is not a gift but a "bonus" based on a performance review, the exemption does not apply and the 250 is fully taxable.

Any ideas?
Click to expand...

My understanding is that it can't be cash. So vouchers/stock etc. are OK, but cash has to be taxed.
 
ClubMan said:
Tax/PRSI exemptions for bonus bonds were removed at the start of this year if I'm not mistaken and they are now subject to full income tax and PRSI deductions as with most other forms of Benefit In Kind. Under the BIK rules there is a small benefit exemption clause which allows a gift/bonus of up to €100 in value to be paid to employees tax/PRSI free in any one year. This is increasing to €250 in 2005 as a result of the recent budget. Perhaps this scheme might be worth availing of in order to give your employees a tax efficient Christmas bonus? If you could defer it until the new year then you could avail of the higher limit if relevant.
Click to expand...

I was relying on the above :D
Think it is Eur250 now though


The other link mustn't have been updated.
If it is 250, It would be over a 100 euros in my pocket rather than theirs!
 
Ham Slicer said:
My understanding is that it can't be cash. So vouchers/stock etc. are OK, but cash has to be taxed.
Click to expand...

My understanding too. But the employer says they can't even give vouchers if it is not a gift but a bonus (based on attending an appraisal). By the way the bonus is bigger than 250 - but I was angling as Clubman suggested, on getting 250 in vouchers and being taxed on the rest.
 
podgerodge said:
My understanding too. But the employer says they can't even give vouchers if it is not a gift but a bonus (based on attending an appraisal)
Click to expand...

All I can say is that your employer is not very accommodating.
 
To be honest, it sounds to me like the employer is sticking to the spirit of the legislation, which is not intended to allow bonuses or parts of bonuses to be paid under the table in this way. Fair play to the employer, IMHO.
 
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