## What it is
The Small Benefit Exemption (SBE) allows employers to give employees non cash benefits such as vouchers without triggering tax. Gifts are exempt provided they meet the conditions.
## 2026 limits
- Total annual value: €1,500 per employee
- Number of gifts: up to 5 per year
- Form: must be non cash (cash and cash equivalents excluded)
- Vouchers usable only for goods or services qualify
The €1,500 limit applies cumulatively. If the first gift in the year is €1,000 and a second is €600, only €500 of the second is tax exempt; the rest becomes taxable as BIK.
## Worked example
Conor's employer gives:
- January: voucher worth €500 (Christmas bonus arrears)
- April: voucher worth €300 (recognition award)
- December: voucher worth €700 (Christmas)
Total: €1,500. All within exemption.
If he received a fourth voucher of €200 at any point, the entire €200 becomes taxable.
## What does not qualify
- Cash bonuses (always taxable)
- Loans or financial benefits
- Vouchers redeemable for cash
- More than five gifts per year (the sixth is fully taxable regardless of total value)
## Why employers use it
A €500 cash bonus to a higher rate employee costs the employee nearly half in tax. A €500 voucher costs nothing in tax, making the SBE highly tax efficient.
For a higher rate employee:
- €500 cash gross: net €240 after PAYE 40 percent, USC 8 percent, PRSI 4.1 percent
- €500 voucher SBE: net €500
## Recording on payroll
Employers should record SBE benefits even though no tax applies. Revenue may audit to verify gifts stay within the rule.
## Group schemes and family
The exemption applies per employee. Family members are not separate beneficiaries. Vouchers given to family members of the employee from the employer count toward the same €1,500 cap.
## Educational notice
This article describes general rules. Employers and tax advisers should verify current SBE thresholds on Revenue.ie before relying on them.