Budget 2027 & the Small Benefit Exemption: What Changed for Irish Employers

Where the exemption stands after Budget Day

The Small Benefit Exemption sits in section 112B of the Taxes Consolidation Act 1997. Since 1 January 2025 it has allowed five qualifying benefits per employee per year with a cumulative value of €1,500. Revenue's guidance sets the conditions out tightly enough that most of the mistakes employers make with it are avoidable.

A benefit qualifies only if it is not cash. Revenue's manual is specific: a voucher counts only where it can be used solely to purchase goods or services and cannot be redeemed, in full or in part, for cash. Any card that can be emptied at an ATM fails, as does any card that can be converted into a product that allows the balance to be transferred to a bank account. Either fails the test even if nobody ever uses it that way, and the worked example in Revenue's manual says exactly that.

The rest of the conditions are easy to state and easy to trip over:

• Five is a ceiling on count, not only on value. A sixth benefit is taxable even where the running total is still under €1,500.
• A single benefit above €1,500 is taxable in full, not just on the excess over the cap.
• Unused allowance does not carry over into the following year.
• Salary sacrifice disqualifies the benefit outright. If the employee gave up pay to get it, the exemption does not apply.
• Real-time reporting has been mandatory since 1 January 2024. Under Enhanced Reporting Requirements, the date and value of every small benefit goes to Revenue on or before the day it is granted. Budget 2027 adds a monthly alternative from 2027, set out below.

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The limits have moved four times in a decade, which is worth keeping in view when reading any Budget commentary about them:

Source: Revenue Tax and Duty Manual Part 05-01-01e, last updated February 2025.

The scheme is written into law until 2029

Section 8 of the Finance Act 2024 did two things. The visible one raised the limits to five benefits and €1,500. The quieter one inserted subsection (3) into section 112B, which, in Revenue's words, provides that the small benefit exemption will apply until the end of the year of assessment 2029.

That changes how a Budget should be read. The exemption is not a measure that lapses unless it is renewed, so it does not need to appear in a Budget speech to survive another year. What a Budget can do is move the cap, move the count of benefits, or bring the end date forward. A Finance Act can change any part of it, including the 2029 date itself, so a legislated end date is a default rather than a promise.

Budget 2027 bears that out. The Department of Finance's Budget 2027 Tax Policy Changes document, laid before the Oireachtas on Budget Day, does not mention the exemption or section 112B. The limits set by Finance Act 2024 carry into 2027 untouched. A Budget announces and the Finance Bill enacts, so the Bill text is the final word once it is published.

What Budget 2027 did change for employers

One measure touches the cost and paperwork of rewarding staff, which takes effect from 1 January 2027.

• A monthly reporting option. Employers can keep reporting small benefits on or before the day they are given, or instead report them by the 14th of the month after the income tax month in which the benefit is provided. The aim is to cut the administrative load of Enhanced Reporting Requirements.

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None of this changes what counts as a small benefit or how much can be given.

A PRSI increase landed five days before Budget Day

This one has nothing to do with the Budget speech, which is why it is easy to miss. It was set years ago in the Department of Social Protection's phased PRSI roadmap rather than announced this autumn.

On 1 October 2026, most PRSI rates rose by 0.15 percentage points. For a Class A employee earning more than €552 a week, the employee rate went from 4.20% to 4.35% and the employer rate from 11.25% to 11.40%. Below that threshold the employer rate went from 9.00% to 9.15%.

The exemption's rules did not change. Its arithmetic did. Take an employee paying income tax at 40%, USC at 8% and PRSI at the Class A1 rate, and compare the two ways of getting €1,500 of value to them:

Illustrative. Assumes a single employee on the higher rate of income tax, above the €70,044 USC threshold and above €552 a week for employer PRSI. Your own figures will differ.

The gap is €15.71 wider than it was in September, per employee. On its own that is nothing. Across a hundred staff it is a little over €1,500, and it moves in the same direction as every other payroll cost this year. The next scheduled step takes employee PRSI to 4.5% on 1 October 2027.

What to do before 31 December

The exemption runs on the calendar year and nothing carries over, so the window closes on 31 December whatever the Budget did. Five things worth doing now:

• Count what has already gone out. The fifth benefit is the last one that can qualify, whatever the running total. An employer who sent a €50 Easter benefit, a €100 birthday benefit and two recognition awards has one slot left, not €1,250 of room across as many gifts as they like.
• Check the card against the cash test, not the marketing. If it can be redeemed in part for cash or used at an ATM, it does not qualify, and the liability falls on the employer through payroll. It's worth checking whether the card can ultimately be converted into a product that allows the balance to be transferred to a bank account. If it can, Revenue’s guidance indicates that the benefit does not qualify for the SBE.
• File through ERR on the day for this year's benefits, on or before the benefit is granted. The monthly option only starts in January 2027, so anything given this Christmas follows the current rule.
• Keep salary sacrifice well out of it. One of Revenue's own examples has an employee accepting a €500 voucher in place of €500 of salary owed after a Workplace Relations Commission claim. The voucher was taxable.
• Treat 2029 as a planning horizon, not a guarantee, and confirm anything unusual with your accountant before you commit to it.

Put the exemption to work before 31 December

If you are setting up this year's benefit and want a card that meets the non-cash test on its face, an OptionsCard can be redeemed for gift cards from over 70 Irish and international brands, carries no purchase fee and holds its value for five years. Sign up at app.optionscard.ie/register to order, or email us at sales@optionscard.ie if you would rather talk through how the five-benefit rule applies to your team first.