Revenue Rules on Long Service Awards
Most companies are familiar with the Small Benefits Exemption which allows up to two tax-free non-cash benefits per employee, per annum, up to the value of €1000. However, companies are less familiar with the Long Service Award Allowance, which offers generous tax relief when an award is made to mark long service (must be 20 years of more).
What is the Long Service Awards Allowance?
When Revenue speaks about long service awards, they have in mind employees with 20 or more years of service with the same company. When employees reach their 20th work anniversary, Revenue in Ireland offers special tax relief on long service awards, if the awards take the form of tangible gifts. These employees have reached a special milestone. With twenty years of service comes ‘veteran’ status. They have experienced the peaks and the troughs in your business. They are mentor-material and deserve a special gift.
Revenue Rules on Long Service Awards
Revenue states that long service awards are not taxable if they meet all of the following conditions:
- the award is made to mark long service of not less than 20 years
- the award is tangible (that is, not vouchers, bonds or cash)
- the cost is not more than €50 for each year of service
- no similar award has been made to the employee within the previous five years
What is the allowance?
Employees with long service are allowed tax-free tangible gifts up to a maximum of €50 for each year of service, starting at 20 years of service and every 5 years thereafter.
Where any of the qualifying conditions are not met, PAYE, PRSI and USC must be applied on the full amount of the award.
EXAMPLE: Charlie has 30 years’ service with his employer. His employer wishes to acknowledge this service and presents him with a gift valued at €1,200. Charlie can receive a tangible benefit with a maximum value of €1,500 due to the number of years’ service with this employer (€50 x 30 years of service). As the value of the watch does not exceed €1,500, Charlie’s employer does not need to apply PAYE, PRSI and USC on the value of the award.
What makes a good service award gift?
A good gift for Long Service Awards is one that has meaning for the employee and that reminds them of your recognition and regard. An outstanding service awards programme should offer a variety of gift options. Today, companies can offer employees a fantastic choice of gifts from premium Irish and international brands on an easy-to-use rewards portal.
Offering a choice of gifts is a sustainable solution as employees choose gifts that they really want. In turn, the gifts they choose are more likely to be valued and used. Quality gifts will last longer so make sure to offer premium gifts from reputable brands on your programme. Made in Ireland products are more sustainable and of exceptional quality, perfect for showing employees that you truly care.
Guide for years of service awards
A well-thought-out year of service programme recognises and rewards employees. It reflects a company’s culture and builds workforce belonging by awarding employees with recognition they deserve, and marking the occasion with a thoughtful gift. See our Guide for Years of Service Awards for Employees if you are building a service recognition programme or planning to refresh an existing programme.
Gift Innovations offers the perfect solution for tax-free Long Service Awards. Our large choice of tangible gifts from top brands, our rewards portal and our fulfilment services are some reasons why many leading companies, with long-serving employees, have implemented our service award programmes.
We would be delighted to demonstrate our solution to you. Please email info@giftinnovations.ie