Bridge Updates

Tax-Efficient Ways You Can Reward Your Employees This Festive Season

As the festive season approaches, you may look for ways to reward your employees for their hard work throughout the year. However, these gestures of appreciation can sometimes come with hefty tax implications. To make your generosity go further, it’s worth exploring tax-efficient ways to reward your employees while staying compliant with Revenue’s guidelines, including the Enhanced Reporting Requirements (ERR).

1. Small Benefit Exemption Scheme

Under the Small Benefit Exemption Scheme, employers can provide employees with non-cash benefits, such as gift cards, up to a maximum of €1,000 in total per tax year, completely tax-free. This exemption allows employers to show appreciation without the employee incurring PAYE, PRSI, or USC charges.

Key Rules:

• Employers may provide up to two qualifying non-cash benefits per year, provided the total combined value does not exceed €1,000.
• Benefits cannot be redeemed or exchanged for cash.
• The scheme applies to all employees but must be used within the defined thresholds to remain tax-free.
• Only non-cash benefits (e.g., gift cards) qualify; cash gifts are subject to taxation. See possible providers below:
  • One4All Gift Cards: Accepted at multiple retailers nationwide.
  • Perx Rewards: Offers tailored reward solutions for businesses.
  • Me2You Gift Cards: Provides versatile spending options across a range of stores.
  • Sodexo Gift Cards: Customisable and widely accepted by various merchants.
  • VoucherMe: Digital and physical gift card solutions for modern businesses.

Changes Effective from 1 January 2025:

Starting January 1st, 2025, the Small Benefit Exemption Scheme is getting a serious boost. Here’s what’s changing:

• Increased Allowance: The tax-free allowance is increasing from €1,000 to €1,500 per employee annually. This means you can give even better gifts without worrying about taxes.
• More Flexibility: Employers will be able to provide benefits in up to five separate instalments instead of just two. This allows businesses to spread out rewards throughout the year and celebrate wins and special occasions as they happen.

These updates provide more value and flexibility for both employers and employees, making it easier to reward and motivate staff throughout the year.

2. Christmas Parties and Events

Hosting a staff Christmas party can be a great way to boost morale. Revenue allows reasonable costs for such events to be treated as a business expense, meaning they are deductible for corporation tax purposes. However, certain conditions apply:

• The event must be open to all employees to qualify for the deduction.
• Expenditure should be “reasonable” — excessive spending could attract scrutiny.
• Any additional gifts given during the event may still be subject to tax unless they fall under the Small Benefit Exemption.

3. Additional Tax-Free Perks

Beyond the Small Benefit Exemption, employers can also provide other tax-free incentives such as:

• Travel Pass Scheme: Offering employees tax-free public transport tickets under this scheme is a year-round benefit but can be a thoughtful gesture to introduce at Christmas.
• Cycle to Work Scheme: Provide employees with tax-free bicycles and equipment up to €1,250 (or €1,500 for electric bikes). While not specific to Christmas, it can be a valuable perk to highlight during the season.

4. Bonuses and Cash Gifts

Bonuses are a popular choice at Christmas but are subject to normal tax rules. This means PAYE, PRSI, and USC must be applied. You may consider offering bonuses as part of a profit-sharing scheme or performance-linked incentive to optimise their impact.

5. Charitable Donations in Employees’ Names

Another meaningful option is making a charitable donation on behalf of your employees. While this doesn’t offer direct benefits to employees, it fosters goodwill and demonstrates corporate social responsibility. Charitable donations are tax-deductible for businesses.

Enhanced Reporting Requirements (ERR)

Revenue’s Enhanced Reporting Requirements demand greater transparency in how benefits and rewards are provided to employees. To ensure compliance:

• Record-Keeping: Maintain detailed records of all rewards, including gift cards, event expenses, and other perks.
• Reporting Obligations: Ensure all taxable benefits are reported accurately in payroll submissions.
• Tax-Free Limits: Adhere strictly to thresholds, such as the €1,000 Small Benefit Exemption (or €1,500 from 2025), to avoid unintentional breaches.
• Audit Preparedness: Be ready to provide documentation to Revenue upon request.

In conclusion, rewarding your employees this festive season is an excellent way to show appreciation and boost morale. By leveraging tax-efficient options such as the Small Benefit Exemption Scheme and organising staff events, you can make your gestures more impactful while staying compliant with Revenue’s regulations and Enhanced Reporting Requirements. Thoughtful planning ensures your rewards are both meaningful and cost-effective, spreading festive cheer without added stress.

Consult your Accountant/Tax Advisor for advice before making any decisions. 

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Preparing Your Business for the Festive Season: A Practical Checklist

As the festive season approaches, many businesses prepare to wind down, recharge, and celebrate the holidays. However, before closing your doors or logging off for a well-deserved break, it’s essential to have a clear plan to ensure a smooth transition into the New Year. Here’s a practical checklist of things to do before closing off for the festive season.

1. Prepare Your Out-of-Office Message

An out-of-office (OOO) message is vital for keeping customers and collaborators informed during your absence. Ensure your message includes:

• The dates you’ll be away and when you’ll return.
• Alternative contact information if urgent matters arise.
• A warm festive greeting to reflect the season.

Example:

Thank you for your email! We’re currently closed for the festive season from [date] to [date]. We’ll respond to your message as soon as possible upon our return. Wishing you a joyful holiday season!

Remember to activate this on all communication platforms, including your email and voicemail.

2. Post a Festive Thank You Message

The end of the year is the perfect time to reflect on your achievements and show appreciation to your customers, clients, and followers. Craft a thank-you blog or social media post that highlights:

• Milestones and successes from the year.
• Gratitude for your community’s support.
• Excitement for the year ahead.

Example:

As we wrap up another fantastic year, we want to thank you for being a part of our journey. Your support means the world to us, and we’re excited to continue growing together in the New Year. Wishing you and yours a happy and peaceful festive season!

Adding festive visuals and a touch of personality will make your message even more memorable.

3. Update Your Google Business Profile

Customers rely on accurate information, especially during the festive season. Make sure your Google Business Profile reflects your holiday operating hours:

• Log in to your Google Business account.
• Navigate to “Hours” and set special holiday hours.
• Add a festive note, like “Closed for Christmas, but we’ll see you bright and early in the New Year!”

This ensures customers aren’t left in the dark and helps maintain trust in your brand.

4. Spruce Up Your Email Signature

Why not spread a little cheer with a festive email signature? Update it to include:

• A holiday-themed graphic or gif.
• A cheerful seasonal sign-off like, “Wishing you a Merry Christmas and a Happy New Year!”
• Links to your festive thank-you post or a promotion you’re running.

This small touch can brighten someone’s day and reinforces your brand’s personality.

5. Review Pending Tasks

Before signing off, make sure your internal affairs are in order:

• Follow up on outstanding invoices to maintain cash flow.
• Set project timelines for January to avoid a chaotic start.
• Back up important data and documents.

Creating a checklist of unfinished business ensures a fresh start in the New Year.

6. Plan for Social Media Coverage

If you’re stepping away from social media, schedule posts in advance to keep your audience engaged. Tools like Hootsuite or Buffer can help you:

• Share festive greetings.
• Promote end-of-year sales.
• Announce your return date.

Automating your content allows you to stay present online while enjoying a well-earned rest.

7. Decorate Your Website

Adding festive touches to your website creates a welcoming atmosphere for visitors. Consider:

• A holiday-themed banner or homepage image.
• Pop-ups with cheerful greetings or promotional discounts.
• Seasonal updates to your call-to-action buttons.

These enhancements make your online presence feel warm and inviting during the holidays.

8. Communicate with Your Team

Keep your team informed about holiday plans:

• Share the OOO schedule and emergency protocols.
• Acknowledge their hard work with a festive team lunch or small gifts.
• Set expectations for the first week back.

Clear communication ensures everyone is on the same page and ready for the New Year.

9. Schedule a Clean-Up

Start the New Year fresh by tidying up your physical and digital spaces:

• Clear desks, organise files, and declutter communal areas.
• Archive emails and organise cloud storage.
• Dispose of outdated inventory or materials.

A clean workspace promotes productivity and a positive mindset.

Final Thoughts

Taking the time to prepare before closing off for the festive season ensures a stress-free holiday and a smooth return. Whether it’s a simple thank-you post or updating your operating hours, these steps strengthen relationships with your customers and set the tone for the year ahead. Happy holidays!

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Check Out Our November Newsletter!

We’re excited to share the latest updates and insights from Bridge Enterprise Centres in our November newsletter! This month, we’re featuring MediationDublin.ie in our Member Spotlight, we have a discount code for WholesaleFlowers.ie and you can also grab tickets for our upcoming event hosted by Osborne Recruitment on Dec 3rd.

 

The newsletter also features available enterprise courses, grants, and various business services like meeting rooms, post box services, and hot desk options. Read the newsletter here.

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