Tax free limit on voucher bonuses to double next year

Staff will be able to receive non-cash bonuses or benefits from their employers up to the value of €500 without paying tax under new measures to be introduced by Minister for Finance Michael Noonan.

The current limit is set at €250 and Mr Noonan’s changes will take effect from next year. The measures are contained in the Finance Bill, which is expected to be published Thursday.

The measure is often availed of by companies who give their workers Christmas bonuses of shopping vouchers but the changes will not be implemented in time for this Christmas.

The Finance Bill, which Mr Noonan briefed the Cabinet on Tuesday, gives legislative effect to changes announced in last week’s budget.

The measure is the only major change to last week’s budget unveiled by Mr Noonan. Other minor changes contained in the Bill are understood to be technical in nature.

However, amendments may be introduced to the Finance Bill if tax incentives for landlords are included in the final housing package being worked on by Mr Noonan and Minister for the Environment Alan Kelly. Significant differences still exists between the two sides, with Mr Kelly sticking to his proposals for rent certainty and Fine Gael sources adamant such a move is not going to be accepted.

Mr Noonan informed the Cabinet of the changes to the small benefit tax measures on Tuesday. Currently, an employer can provide an employee with a once-off, annual non-cash benefit that is not liable for tax. Cash payments are fully taxed.

Mr Noonan is now making provision to increase the maximum value of such a benefit from €250 to €500. Anything above that is subject to PAYE and PRSI.