Benefit in Kind

• Company Cars
• Company Vans
• Preferential Loans
• Accommodation
• Travel Passes
• Childcare Facilities
• Other Exemptions
• Anti Avoidance
• Vouchers

All Benefits in Kind are subject to PAYE, PRSI and USC, and taxed as notional pay. Benefits are taxable when the benefit is provided or when the payment is made. Where the benefit provided to the employee does not exceed €500 in value there is no BIK, the amount is not cumulative over a number of benefits and only one such benefit may be provided annually.

Consequently there is an obligation to report and pay any tax due from the employee. In certain exceptional circumstances the employer may pay the tax on behalf of the employee, these situations are as follows:

1. Where the employee has insufficient income, in such cases the payment on behalf of the employee will be treated as a simultaneous deduction from the employee’s liability to income tax.
2. Employers may make arrangements with the Revenue Commissioners to account directly to the Revenue Commissioners rather than through the normal PAYE system for the tax payable in respect of benefits provided to employees which are minor and irregular. Where the employer so accounts for the tax, the benefits will not form part of the total income of the employees and they will not be entitled to credit for or repayment of the tax accounted for.

Company Cars

Since 1 January 2023 Benefit in Kind on company cars will be
calculated with reference to CO2 emissions.
Vehicle       CO2 Emissions
Emission    (CO2 g/km)
Category
A                 0g/km up to and including 59g/km
B                 More than 59g/km up to and including 99g/km
C                 More than 99g/km up to and including 139g/km
D                More than 139g/km up to and including 179g/km
E                More than 179g/km
Lower Limit          Upper limit  A      B      C     D      E
km                        km               %     %      %     %     %
—                          26,000         22.5 26.25 30 33.75 37.5
26,001                  39,000         18     21      24  27     30
39,001                  52,000         13.5  15.75 18   20.25 22.5
52,001                  —                 9      10.5    12   13.5   15
Employers are required to maintain records of the kilometres by each employee. This should be maintained on a weekly / monthly basis in order to calculate the BIK to be reported on a real time basis via the weekly/monthly payroll returns.
Revenue have advised that employers should review this regularly (at least quarterly) to ensure the BIK recorded to Revenue is as accurate as possible.
Employee contributions: A reduction is available where an employee makes a general contribution to the running costs of the car; however, a deduction is no longer available where an employee meets the specific cost of motor tax, insurance and running costs.
Foreign Travel: Where an employee is required to work abroad, the notional pay is reduced by reference to the number of days spent working abroad. This is conditional on the employee working a minimum of 30 days abroad and the car not being available for use by family members during the period of absence.
Tapering relief is available for high levels of business travel

Further reduction: A 20% relief from BIK on cars applies to employees who work at least 20 hours per week, and whose annual business mileage exceeds 8,000 km. The employees must
spend 70% or more of their time away from their place of work or business and work a minimum of 20 hours per week on average.
Revenue will require each employee to submit a logbook, which ust be retained for up to six years.

Foreign Travel: Where an employee is required to work abroad the notional pay is reduced by reference to the number of days spent working abroad. This is conditional on the employee’s working a minimum of 30 days abroad and the car not being available for use by family members during the period of absence.

Further reduction: A 20% relief from BIK on cars applies to employees who work at least 20 hours per week, and whose annual business mileage exceeds 8,000 Kilometres. The employees must spend 70% or more of their time away from their place of work or business, and work a minimum of 20 hours per week on average. Revenue will require each employee to submit a logbook, which must be retained for up to six years.

Company Vans

There is an exemption from Benefit in Kind on the provision of a company van where all of the following conditions are satisfied:

• The van is essentially used for the purposes of the employee’s work
• The employer requires the van to be brought home
• The employee spends most of his/her working time away from the office

Where any of the above conditions are not met, a BIK charge of 5% of the original market value applies.

Electric vehicles

You may choose to make an electric van available to your
employee for private use in future. Partial relief will apply in
respect of vans made available between 1 January 2023 and 31
December 2025.
This relief applies by reducing the OMV of the vehicle. The
reduction which applies is as follows:
• €35,000 in respect of vans made available during 2023
• €20,000 in respect of vans made available during 2024
and
• €10,000 in respect of vans made available during 2025
Where the relief reduces the OMV to nil, a BIK charge will not
arise. Any OMV in excess of the reduction is liable to BIK in the
usual manner.

Electric Vehicles

Finance Act 2017 introduces a zero percent BIK rate for electric
vehicles in 2018 which applies equally to company cars and
company vans. Finance Act 2018 imposes a limit of €50,000 on the
original market value of the vehicle where made available in the
three-year period to 31 December 2021. This has been extended to
December 2022.
It has been announced that the 0% Benefit in Kind on electric
vehicles will be phased out over the next 4 years by reducing the
original market value of the car as follows:
1. By €35,000 for 2023
2. By €20,000 for 2024
3. By €10,000 for 2025
If the reduction reduces the OMV to Nil then no BIK charge arises, if
there is a portion remaining then it is charged at the prescribed

Preferential Loans

• The specified rate for home loans is 4%
• The specified rate for all other loans is 13.5%

The preferential sum is calculated by reference to the balance of the loan as reduced by actual repayments as opposed to payments due under a loan agreement.

Accommodation

The benefit in kind is the amount, which could reasonably be expected to be obtained on a yearly letting. Where the living accommodation is owned by the employer, the amount referred to is as a rule of thumb calculated as 8% of the current market value of the accommodation.

Travel Passes

The provision by an employer of monthly or annual bus, train or LUAS passes to directors and employees is exempt from income tax. It is also possible to structure the reduction of an employees salary to cater for the provision of this benefit.

This exemption also includes passes for travel on commuter ferries which operate within the State.

Professional Subscriptions

Professional subscriptions are subject to benefit in kind. However where the expense is incurred by the Company but where the individual if they had incurred it would have been entitled to a deduction for the expense on the basis that it was incurred wholly, exclusively and necessarily incurred in the course of the individuals employment duties then no BIK will arise.

Other Exemptions

• Where private use is incidental to business use, the following will not be subject to benefit in kind:
  1. Mobile Phones
  2. Computers and related equipment including high speed internet connections
• Certain costs and expenses in respect the provision of personal security assets and services to an employee will not be subject to benefit in kind where there is a credible and serious threat to a persons physical security resulting from their employment.
• The provision of a new bicycle and/or related safety equipment up to
  a maximum for pedelecs or ebikes and related safety equipment.
  There are 3 limits depending on the type of bike you bought. The
  limit (including related safety equipment) is:
  • €3,000 for cargo and ecargo bikes.
  • €1,500 for pedelecs and e-bikes.
  • €1,250 for other bicycles.
  • The bicycle is used to travel between home and the normal place
  of work. The exemption can only be claimed once every five years.
  If certain conditions are met it is possible to provide the benefit by
  reducing salary.

• Company Cars
• Company Vans
• Preferential Loans
• Accommodation
• Travel Passes
• Childcare Facilities
• Other Exemptions
• Anti Avoidance
• Vouchers

All Benefits in Kind are subject to PAYE, PRSI and USC, and taxed as notional pay. Benefits are taxable when the benefit is provided or when the payment is made. Where the benefit provided to the employee does not exceed €500 in value there is no BIK, the amount is not cumulative over a number of benefits and only one such benefit may be provided annually.

Consequently there is an obligation to report and pay any tax due from the employee. In certain exceptional circumstances the employer may pay the tax on behalf of the employee, these situations are as follows:

1. Where the employee has insufficient income, in such cases the payment on behalf of the employee will be treated as a simultaneous deduction from the employee’s liability to income tax.
2. Employers may make arrangements with the Revenue Commissioners to account directly to the Revenue Commissioners rather than through the normal PAYE system for the tax payable in respect of benefits provided to employees which are minor and irregular. Where the employer so accounts for the tax, the benefits will not form part of the total income of the employees and they will not be entitled to credit for or repayment of the tax accounted for.

Company Cars

Since 1 January 2023 Benefit in Kind on company cars will be
calculated with reference to CO2 emissions.
Vehicle       CO2 Emissions
Emission    (CO2 g/km)
Category
A                 0g/km up to and including 59g/km
B                 More than 59g/km up to and including 99g/km
C                 More than 99g/km up to and including 139g/km
D                More than 139g/km up to and including 179g/km
E                More than 179g/km
Lower Limit          Upper limit  A      B      C     D      E
km                        km               %     %      %     %     %
—                          26,000         22.5 26.25 30 33.75 37.5
26,001                  39,000         18     21      24  27     30
39,001                  52,000         13.5  15.75 18   20.25 22.5
52,001                  —                 9      10.5    12   13.5   15
Employers are required to maintain records of the kilometres by each employee. This should be maintained on a weekly / monthly basis in order to calculate the BIK to be reported on a real time basis via the weekly/monthly payroll returns.
Revenue have advised that employers should review this regularly (at least quarterly) to ensure the BIK recorded to Revenue is as accurate as possible.
Employee contributions: A reduction is available where an employee makes a general contribution to the running costs of the car; however, a deduction is no longer available where an employee meets the specific cost of motor tax, insurance and running costs.
Foreign Travel: Where an employee is required to work abroad, the notional pay is reduced by reference to the number of days spent working abroad. This is conditional on the employee working a minimum of 30 days abroad and the car not being available for use by family members during the period of absence.
Tapering relief is available for high levels of business travel

Further reduction: A 20% relief from BIK on cars applies to employees who work at least 20 hours per week, and whose annual business mileage exceeds 8,000 km. The employees must
spend 70% or more of their time away from their place of work or business and work a minimum of 20 hours per week on average.
Revenue will require each employee to submit a logbook, which ust be retained for up to six years.

Foreign Travel: Where an employee is required to work abroad the notional pay is reduced by reference to the number of days spent working abroad. This is conditional on the employee’s working a minimum of 30 days abroad and the car not being available for use by family members during the period of absence.

Further reduction: A 20% relief from BIK on cars applies to employees who work at least 20 hours per week, and whose annual business mileage exceeds 8,000 Kilometres. The employees must spend 70% or more of their time away from their place of work or business, and work a minimum of 20 hours per week on average. Revenue will require each employee to submit a logbook, which must be retained for up to six years.

Company Vans

There is an exemption from Benefit in Kind on the provision of a company van where all of the following conditions are satisfied:

• The van is essentially used for the purposes of the employee’s work
• The employer requires the van to be brought home
• The employee spends most of his/her working time away from the office

Where any of the above conditions are not met, a BIK charge of 5% of the original market value applies.

Electric vehicles

You may choose to make an electric van available to your
employee for private use in future. Partial relief will apply in
respect of vans made available between 1 January 2023 and 31
December 2025.
This relief applies by reducing the OMV of the vehicle. The
reduction which applies is as follows:
• €35,000 in respect of vans made available during 2023
• €20,000 in respect of vans made available during 2024
and
• €10,000 in respect of vans made available during 2025
Where the relief reduces the OMV to nil, a BIK charge will not
arise. Any OMV in excess of the reduction is liable to BIK in the
usual manner.

Electric Vehicles

Finance Act 2017 introduces a zero percent BIK rate for electric
vehicles in 2018 which applies equally to company cars and
company vans. Finance Act 2018 imposes a limit of €50,000 on the
original market value of the vehicle where made available in the
three-year period to 31 December 2021. This has been extended to
December 2022.
It has been announced that the 0% Benefit in Kind on electric
vehicles will be phased out over the next 4 years by reducing the
original market value of the car as follows:
1. By €35,000 for 2023
2. By €20,000 for 2024
3. By €10,000 for 2025
If the reduction reduces the OMV to Nil then no BIK charge arises, if
there is a portion remaining then it is charged at the prescribed

Preferential Loans

• The specified rate for home loans is 4%
• The specified rate for all other loans is 13.5%

The preferential sum is calculated by reference to the balance of the loan as reduced by actual repayments as opposed to payments due under a loan agreement.

Accommodation

The benefit in kind is the amount, which could reasonably be expected to be obtained on a yearly letting. Where the living accommodation is owned by the employer, the amount referred to is as a rule of thumb calculated as 8% of the current market value of the accommodation.

Travel Passes

The provision by an employer of monthly or annual bus, train or LUAS passes to directors and employees is exempt from income tax. It is also possible to structure the reduction of an employees salary to cater for the provision of this benefit.

This exemption also includes passes for travel on commuter ferries which operate within the State.

Professional Subscriptions

Professional subscriptions are subject to benefit in kind. However where the expense is incurred by the Company but where the individual if they had incurred it would have been entitled to a deduction for the expense on the basis that it was incurred wholly, exclusively and necessarily incurred in the course of the individuals employment duties then no BIK will arise.

Other Exemptions

• Where private use is incidental to business use, the following will not be subject to benefit in kind:
  1. Mobile Phones
  2. Computers and related equipment including high speed internet connections
• Certain costs and expenses in respect the provision of personal security assets and services to an employee will not be subject to benefit in kind where there is a credible and serious threat to a persons physical security resulting from their employment.
• The provision of a new bicycle and/or related safety equipment up to
  a maximum for pedelecs or ebikes and related safety equipment.
  There are 3 limits depending on the type of bike you bought. The
  limit (including related safety equipment) is:
  • €3,000 for cargo and ecargo bikes.
  • €1,500 for pedelecs and e-bikes.
  • €1,250 for other bicycles.
  • The bicycle is used to travel between home and the normal place
  of work. The exemption can only be claimed once every five years.
  If certain conditions are met it is possible to provide the benefit by
  reducing salary.

Vouchers

The total value of the tax-free benefits or vouchers an employer can
give an employee per year has increased from €500 to €1,000. The
number of qualifying vouchers or incentives per year has also
increased from one to two. This change applies for 2022 and
subsequent years.

Anti Avoidance

Anti avoidance measures exist to restrict the exclusion of PAYE to shares given to an employee in an employers company or a company controlled by an employer only. As well as applying to existing employees the measures also apply to previous employees who retain their benefits.

Unapproved salary sacrifice arrangements are subject to tax.