What’s so bad about cash? Fiona Reddan outlines a few reasons not to buy vouchers this Christmas.
Once an employer goes over €1,000, the full value of the voucher is subject to PAYE, PRSI and USC, so there is no benefit in offering €1,200 for example, to an employee. You have to stick to €1,000 or less for the scheme to work.
However, a strict stipulation of the Irish scheme is that the benefit must not be paid in cash, only by gift card.According to a Revenue spokeswoman, the legislation is quite strict that the payment must be provided “in the form of a voucher or other non-cash item”.
The reason for not paying in cash, Revenue says, is that employees could look to sacrifice salary to get a tax-free payment. What this means, is that someone on €40,000, for example, will agree to be only paid €39,000, and will instead take the further €1,000 in the tax free cash payment, resulting in a greater after tax income. However, it also means a lower tax take for the exchequer.Many people like vouchers; although they don’t suit everyone.
If you don’t spend the cards, you could lose money. With One4All for example, once 12 months has elapsed, a monthly charge of €1.45 applies to a card . That can eat away, if not entirely remove, any outstanding balance. While the cards do last for five years, €50 gifted in 2022 will be worth €0 by 2027, if nothing has been spent on it.
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