If an employee uses a vehicle provided by their employer for private purposes, there are specific requirements to report this Benefit in Kind (BIK) for tax purposes. It is important to note that if a vehicle is used to travel to and from work, it is generally considered to be private use of such vehicle.
When an employer provides a vehicle for an employee’s use, the employee is liable for the BIK charge, which will be subject to PAYE, PRSI, and USC, for each month the vehicle is used.
Employees will be also liable for the BIK charge if they receive a vehicle through their employment, for example, a vehicle sponsored by a connected party, or a third party.
The term “vehicle” in this context broadly refers to cars, crew cabs, and jeeps. It does not include the following:
- Motorcycles weighing less than 410 kg.
- Vans. (See this page provided by Revenue.)
- Any other vehicles that are not commonly provided for private use and are unsuitable as such, for example, hearses, lorries, and tractors.
Please note: Where an employer transfers ownership of a vehicle to an employee, general BIK rules will apply. When an employer gives an employee an allowance to purchase a car, this will form part of the employee’s taxable salary. Refer to this Revenue page for more info.
For guidance on calculating the taxable BIK for the use of a company vehicle by an employee, refer to this Revenue page for the latest requirements.
To cater for this BIK charge for an employee on SimplePay, a custom benefit item should be created to account for the taxable BIK amount for the employee, and a custom deduction item should be created to account for any contributions an employee makes towards the running costs of the vehicle. More information about Custom Items can be found here: