Sole trader paying bonus to a contractor

Mulberry

Hi there
I am a sole trader.
I use a particular contractor a lot, and would like to pay this person a christmas bonus.

Is there any way to make this tax efficient for this person?

Obviously they're not an employee, not on the payroll, so I can't use the €500 gift voucher scheme.

Is there any other way? I'd really like to maximise the benefit of my hard earned euros to this person.

Thanks!

Small gift exemption. Up to €3,000.
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/small-gift-exemption/index.aspx

Mulberry

downtheroad wrote: »

Small gift exemption. Up to €3,000.
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-exemptions/small-gift-exemption/index.aspx

Wow.
So if I treated this as a gift, not a payment, this would not be counted as this person's income? So not taxable in any way? Wow.

Hang on, would I be able to 'give' the gift from my sole trader bank account do you know?

Stationmaster

Mulberry wrote: »

Wow.
So if I treated this as a gift, not a payment, this would not be counted as this person's income? So not taxable in any way? Wow.

Hang on, would I be able to 'give' the gift from my sole trader bank account do you know?

Of course. But you wouldn't be able to use it as a deductible expense obviously in your accounts and would have to show it as drawings.....

Mulberry

Mulberry wrote: »

Wow.
So if I treated this as a gift, not a payment, this would not be counted as this person's income? So not taxable in any way? Wow.

Hang on, would I be able to 'give' the gift from my sole trader bank account do you know?

It is tax efficient for the receiver of the gift. However as the giver of the gift you can't give it from your sole trader account as it isn't wholly and exclusively a business expense. So unfortunately as the gift giver it will be from after tax income for you.

Mulberry

Of course. Darn.