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 4.2 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.