You may give your employee a discount on goods or services that you produce or sell in your business. This is not a taxable benefit in kind where:
- the amount paid by your employee is greater than or equal to the costs you incur to provide them with the item
- the goods cannot easily be changed into money (your employee is not able to sell the item easily).
Price below acquisition or production costs
A taxable benefit in kind arises where you provide a discounted item to your employee and both of the following apply:
- your employee pays an amount less than the costs you incur to provide them with the item
- your employee is not able to sell the item easily.
In these cases, the difference between your costs and the price paid by your employee is a taxable benefit. Pay As You Earn (PAYE), Pay Related social Insurance (PRSI) and Universal Social Charge (USC) must be operated on the benefit.
Where the goods can be easily changed into money
A taxable benefit arises where your employee receives a discount item from you that they can easily sell.
In these cases, the difference between the value of the item and the price paid by your employee is a taxable benefit. PAYE, PRSI and USC must be operated on the benefit.
In-house vouchers or discount notes
You may operate a scheme to provide your employee with in-house vouchers or discount notes which are:
- based on past purchases
- may be used against future purchases.
This is a taxable benefit in kind. Employees must pay PAYE, PRSI and USC on the face value of the voucher.
If you only provide one voucher in the year, the small benefit may apply.