Finance Bill 2022 - Employment

Employment Small Benefit Exemption

The small benefit exemption allows employers to pay a small benefit to employees each year without having to operate payroll taxes on that benefit.

The benefit cannot be in cash or cannot be redeemed for cash, rather, the benefit can only be used to purchase goods and services. Typically employers award gift vouchers to their employees under this scheme.

The Finance Bill confirms the changes to this relief as announced in Budget 2023 namely:

• an increase in the value of benefits or vouchers an employer can give in a tax year to a maximum of €1,000 (from €500) and
• an increase in the number of qualifying vouchers and benefits that can be given in a tax year from one to two.

The above changes will apply for 2022 and subsequent years.

New Proposed Employer Reporting Obligations

A new measure has been introduced which provides for the mandatory reporting to Revenue by employers of the following “reportable benefits”:

• The remote working daily allowance of €3.20
• The payment of vouched travel and subsistence expenses
• The small benefit exemption (outlined in previous section)

As these new reporting obligations are subject to a Commencement Order, the effective date is not yet known.

Cycle to Work Scheme

The cycle to work scheme provides an employee with an exemption from benefit-in-kind on expenditure incurred by an employer in connection with the provision of a bicycle/pedelec and/ or safety equipment to an employee or director.

Finance Bill 2022 includes an amendment which extends the benefit-in-kind exemption to cargo bicycles and e-cargo bicycles (i.e. pedelec configuration) by increasing the threshold for same to €3,000.

The changes will apply from 1 January 2023.

Special Assignee Relief Programme (SARP)

SARP provides for income tax relief on a portion of employment income earned by employees assigned by their employer to work in Ireland.

Under the current rules, SARP provides for relief from income tax on 30% of the employee’s salary above €75,000.

This relief was due to expire on 31 December 2022 but has been extended by a further 3 years to 31 December 2025.

In a further change to the relief a relevant employee who first arrives in Ireland on or after 1 January 2023 will require a minimum annualised salary of €100,000, rather than the previous threshold of €75,000, to be entitled to avail of the relief.

Foreign Earnings Deduction (FED) 

The Bill confirms the extension of the Foreign Earnings Deduction (FED) to the end of 2025 which was announced on Budget Day.

The FED provides relief from income tax on up to €35,000 of income for employees who are tax resident in Ireland and who travel out of the State to temporarily carry out employment duties in certain qualifying countries.

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