Benefit-in-kind

Permanently deleted user

Benefit in Kind is a non-cash benefit typically given by employers to employees. If the total value is more than €1,905 then you must pay tax on the benefits. However, employers can give their employees a once-off benefit with a value of up to €500 per year, tax-free.

For anything over this amount, tax must be paid.

If employers receive a repayment from an employee for the benefit, the value is reduced by that amount. Benefits given to an employee’s spouse, civil partner, family members, or dependents are also taxable.

Examples of benefits-in-kind include:

Company cars and vans (for mostly private use)
Living accommodation
Loans
Holidays
Payment of bills
Prizes
Medical insurance premiums
Childcare facilities

The value of a benefit is generally calculated as the higher of:

● Employer's cost in providing the benefit

● The value of the benefit if it can be converted into money (less any payment you make to your employer for the benefit)

If you use a company car, you can reduce the amount assessed for tax if you have mileage for business purposes and this can be reduced ever further if you contribute to insurance costs, motor tax, or petrol.

Preferential home loans

A ‘preferential loan’ means a loan from your employer to you/your spouse/civil partner on which no interest is payable or interest is payable at a rate lower than the ‘specified rate’. An employee who gets a preferential loan is charged income tax on the difference between the interest actually paid and the amount which would have been payable at the 'specified' rates of interest for the loans.

The current rates are:

Qualifying loan for home (principal residence): 4%
Other loans: 13.5%

Small benefit relief

You can get a small non-cash benefit from your employer without paying PAYE, USC and PRSI. However the benefit must have a value of €500 or under (€250 up to 21 October 2015). This treatment doesn't apply to cash payments, which are taxable in full.

You can only avail of this relief once in a tax year and if the benefit is more than €500 in value (€250 up to 21 October 2015), then the full value of the benefit is subject to PAYE, USC and PRSI.

Table: Benefits that can be exempt or treated tax efficiently*
Bus/train passes for 1 month or more
Non-cash personal gifts
Employer's contribution to approved pension schemes
Mobiles, computer equipment, and home high-speed internet connections provided for business use (where private use is incidental)
Private use of company van for the purposes of work: Private use is prohibited
Bicycle and safety equipment as part of the Cycle to Work Scheme
Certain share and approved profit sharing schemes
Canteen facilities
Reimbursement of expenses incurred in the course of employment
Some accommodation provisions
Lump sum and certain redundancy payments
Working clothes

*This is not an exhaustive list and restrictions or conditions may apply

Was this article helpful?

1 out of 1 found this helpful

Have more questions? Submit a request

Comments (0 comments)

Article is closed for comments.