FAQ - Benefit in Kind

Application of PAYE/PRSI to BIK with effect from 1st January 2004

I. General matters

II. Employer matters

III. Company Car/Company Van matters

IV. Accommodation matters

V. Miscellaneous matters  

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I. General Matters

1. What is the income limit for BIK?
2. Does income from previous employers count for the limit?
3. How does this apply to connected employers?
4. Does the €1,905 income limit apply to Directors?

1. What is the income limit for BIK?

An employee whose income (inclusive of taxable benefits-in-kind) is less than €1,905 is not liable to income tax on non-cash benefits-in-kind provided.

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2. Does income from previous employers count for the purposes of the €1,905 limit?

Income from a previous employment does not reckon for the purposes of the €1,905 limit except where the previous employment has been held by the employee with a connected body corporate.

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3. How does this apply to connected employers?

All employments held by an individual under the same concern or within a group of two or more concerns, one of which controls the rest, are treated as a single employment for the purposes of the €1,905 limit.

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4. Does the €1,905 income limit apply to Directors?

No. In the case of directors, all benefits-in-kind are chargeable irrespective of the level of income. Furthermore, an employee who also holds a position as director in the same concern or under any concern within the same group, is liable to income tax and PRSI on any non-cash benefits provided in respect of the employment/directorship whatever the income.

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II. Employer Matters

1. Define "best estimate"
2. What happens if the calculated PAYE/PRSI liability for the pay period exceeds the amount of pay?
3. Does the employer have to collect the full amount of PAYE/PRSi due on the benefit in the relevant pay period where there is sufficient actual pay in that period to cover the full PAYE/PAYE due?
4. What happens if the employee leaves and there is "PAYE paid on account" or a "shortfall of PAYE" not recouped from the employee?
5. An employee has a company car and the notional pay is spread over the entire year. What happens in a Week 53 tax year?
6. Can an employer still pay the PAYE & PRSI Liability on the employee's behalf.
7. What is the status of existing agreements between employers and tax offices?
8. What returns are required in respect of notional pay figures? 
9. Is an employer required to make any adjustments for notional pay after the end of the tax year where "best estimate" was used and documented to show that all reasonable efforts were made to determine the correct notional pay amount for a tax year?
10. An employer is on the Direct Debit system paying P30 tax. Is it neccessary to increase the Direct DEbit in the situation where a notional payment is concluded in one particular week.
11. An employer who returns the P35 on an annual basis a benefit in the middle of the tax year. When does the PAYE/PRSI due on notional pay become due?
12. Will forms P11D still be issued?
13. What are the consequences of either incorrect operation or non-operation of PAYE/PRSI on benefits (penalties etc.)? 
14. Are there any plans to redesign the tax deduction card to provide an additional column for notional pay?
15. In an employer required to show notional pay seperately on the employer's payslip? 
16. How do the new arrangements affect the Christmas Bonus and how it is treated?
17. How are premiums paid by an employer for Permanent Health Insurance cover for employees treated? 
18. An employer contributes money towards a sick scheme fund. The employees also contribute from their net pay to sick scheme. How is the employer's contribution treated under the new arrangements? If an employee is out of work through sickness and is from this fund, is this subject to PAYE/PRSI?
19. What should an employer do when he or she discovers that an incorrect amount of notional pay has been put through the payroll system? 

1. Define "best estimate"

An employer will be regarded as having made a best estimate where a genuine attempt has been made to calculate the taxable benefit (also known as the notional pay) based on all details available to the employer at the time the benefit is provided. If the employer has any doubt about the valuation of any benefit-in-kind the relevant regional tax district should be consulted.

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2. What happens if the calculated PAYE / PRSI liability for the pay period exceeds the amount of pay?

If the calculated PAYE/PRSI liability exceeds the employee's pay, the employer is obliged to account for and remit the total PAYE/PRSI due on the combined actual and notional pay (in full) with the relevant monthly P30 return. The amount not deducted from the employees pay or any 'shortfall' not deducted in the particular pay period may be recouped from the employee by collecting it over remaining pay periods in the tax year. The PAYE paid on account by the employer at the time the benefit was provided must be recouped from the employee in full by March 31st of the following tax year, otherwise, the employee will be treated as having received a further benefit on the relevant 31st March equivalent to the amount of un-recouped income tax and the employer must operate PAYE/PRSI on this amount.

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3. Does the employer have to collect the full amount of PAYE due on the benefit in the relevant pay period where there is sufficient actual pay in that period to cover the full PAYE due?

In the case of PAYE due on the benefit, the employer may spread the deduction over several pay periods within the tax year where the deduction in one pay period would cause hardship. However, regardless of the manner in which the PAYE/PRSI is recouped from the employee, the employer must remit the full PAYE/PRSI due on the benefit with the appropriate P30 having regard to the date the benefit was provided.

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4. What happ ens if the employee leaves and there is "PAYE paid on account" or a 'shortfall of PAYE' not recouped from the employee?

If the employee leaves the company before the amount paid on account by the employer or any 'shortfall' has been recouped, the employer must, upon receipt of a form P11D, return details of the un-recouped income tax. The taxpayer will be pursued directly by Revenue for the income tax arising on the further benefit arising.

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5. An employee has a company car and the notional pay is spread over the entire year. What happens in a Week 53 Tax Year?

If an employer has charged the calculated taxable benefit (the notional pay for the year) over the 52 weeks, no notional pay should be included in the 53rd pay day as the full notional pay will have been charged in the 52 weeks.

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6. Can an employer still pay the PAYE & PRSI Liability on the employee's behalf?

Under the new arrangements, employers may continue to discharge the PAYE/PRSI liability arising on benefits provided. However, the PAYE/PRSI must be calculated on a grossed up basis - taking the taxable benefit provided as the net (after tax and employee PRSI) amount received by the employee and regressing that amount at the employee's marginal rate of tax and PRSI. Whether the grossed up "notional pay" should be reflected in the employees payroll/P60 depends on the extent and frequency of the benefit provided.

Minor and Irregular Benefits

Where the benefit is minor and irregular, the employer may discharge the PAYE/PRSI liability in a similar fashion to the practice which prevailed prior to the introduction of the PAYE/PRSI on benefits. The employer may contact the relevant tax office to agree the liability arising and submit a supplementary form P35. However, the PAYE liabilities must be calculated on a grossed up basis (net benefit re-grossed at the employees' marginal rate of tax). PRSI will also be chargeable on that re-grossed amount.

Regular or Substantial Benefits

For regular or substantial benefits, where the employer wishes to discharge the PAYE/PRSI liability, the net benefit must be re-grossed at the employee's marginal rate of tax and PRSI and PAYE/PRSI accounted for on this re-grossed amount. The re-grossed amount reckons as emoluments of the employee and must be put through the payroll as normal and be included together with details of tax and PRSI thereon on all relevant documentation - TDC, P60, P45, P35.

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7. What is the status of existing agreements between employers and tax offices?

Existing agreements with tax offices may no longer be valid after 31 Dec 2003 where they do not comply with the rules set out in the Guide. Employers should contact the appropriate regional tax office with a view to making new agreements where appropriate.

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8. What returns are required in respect of notional pay figures?

Whereas employers are not required to show notional pay figures separately on individual employee documentation (P45's , P60's ), employers are required to keep records of all benefits provided to employees and calculations of the amounts taken into account. These will be required in the event of an audit.

The P35 summary sheet for 2004 will include an additional field to record the total notional pay for the year for the employees listed on the P35. This is the only reporting requirement in respect of notional pay to which PAYE/PRSI has been applied.

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9. Is an employer required to make any adjustments for notional pay after the end of the tax year where 'best estimate' was used and documented to show that all reasonable efforts were made to determine the correct notional pay amount for a tax year?

Where a bona fide 'best estimate' was used and documented to show that all reasonable efforts were made to determine the correct amount of notional pary for a tax year, the employer will not be required to make any adjustments after the end of the tax year. This is on the understanding that the best estimate was calculated by reference to all relevant information available to the employer and was revisited, where appropriate, before the end of the tax year e.g. it is expected that an employer who calculated a best estimate of the notional pay for an employee in respect of a company car in January would revisit the best estimate before the end of the tax year (having regard to the actual business miles done compared to the estimated mileage taken in January). It is not sufficient that a best estimate be calculated in January and not revisited at all.

In general, it is expected that the difference between the best estimate and the correct notional pay would not be substantial.

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10. An employer is on the Direct Debit system paying P30 tax. Is it necessary to increase the Direct Debit in the situation where a notional payment is included in one particular week?

Yes it will be necessary to increase the Direct Debit in these circumstances. The employer should contact the Collector General, Direct Debit Section, Apollo House, Tara Street Dublin 2 in writing or by fax (Fax No 01 6717020) to advise them of the adjustment.

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11. An employer who returns the P35 on an annual basis gives a benefit in the middle of the tax year. When does the PAYE/PRSI due on notional pay become due?

Employers who make annual P35 returns are required to remit the PAYE/PRSI due on any notional pay for the year in the same manner that the PAYE/PRSI on ordinary salary is due for the year. Therefore, the P35 would be submitted along with the Total PAYE/PRSI due (on actual and notional pay) after the end of the tax year (but before the due payment date).

The presence of notional pay does not alter the usual P30/P35 filing dates.

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12. Will forms P11D still be issued?

Yes. The employer requirement to complete a form P11D on request has not been rescinded. Where an employer receives a form P11D, there will be a requirement on the employer to return all benefits to which PAYE/PRSI does not apply, e.g. free or discounted shares, employers paying PRSA contributions on behalf of employees.

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13. What are the consequences of either incorrect operation or non-operation of PAYE / PRSI on benefits (penalties etc)?

The existing penalties for non-operation of PAYE/PRSI on cash remuneration will apply equally to the non-operation of PAYE/PRSI on benefits. In the case of incorrect operation where the employer has made a best estimate (see question 3 above) penalties will not generally be applicable.

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14. Are there any plans to redesign the Tax Deduction Card to provide an additional column for notional pay?

Not at this time. The existing Tax Deduction Card has a free column for use by the employer. The column is question is Column F which is headed 'For Employer use- Net Pay, Employers PRSI etc.' This column can be used for Notional Pay if required.

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15. Is an employer required to show notional pay separately on the employee's payslip?

There is no requirement under tax legislation for an employer to show the notional pay separately but there may be Employment Law implications. Any queries in this regard should be referred to the Department of Enterprise, Trade and Employment. To avoid potential queries from employees, showing the notional pay separately could prove useful.

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16. How do the new arrangements affect the Christmas Bonus and how it is treated?

A cash bonus at Christmas should be put through the payroll and PAYE/PRSI applied as normal. Where the bonus is in non-cash form, if the value is less than €100 per employee and no other non-cash benefits has been received by the employee during the year, PAYE/PRSI need not be applied (covered by the one off small benefit exclusion). If the value of the non-cash bonus exceeds €100 or where the small benefit exclusion has already been availed of, the full value of the bonus must be treated as notional pay.

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17. How are premiums paid by an employer for Permanent Health Insurance Cover for employees treated?

Company policies

Many employers pay "sick pay" where employees are out of work for extended periods due to illness. The employer might take out a policy of insurance to cover the costs should such an eventuality arise. Where the policy is a general one to cover all employees PAYE/PRSI need not be applied to the premiums paid under such a policy of insurance taken out by the employer.

Contributions paid by the employer on behalf of an employee

PAYE/PRSI need not be applied to an employer paid contribution to a Revenue approved policy or scheme to the extent that the combined contribution (employee's and employer's) does not exceed the relevant 10% limit. Any excess over the 10% should be put through the payroll and PAYE/PRSI applied.

Where the premiums are in respect of an unapproved policy or scheme, the premiums paid by the employer must be treated as notional pay and PAYE/PRSI must be applied.

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18. Employer contributes money towards to a sick scheme (fund). The employees also contribute from their net pay to the sick scheme. How is the employer's contribution treated under the new arrangements? If an employee is out of work through sickness and

PAYE/PRSI need not be applied to the employer's contribution to such a scheme. However any payments from such a fund which exceeds the employee's contribution would generally be taxable. Full particulars of the scheme should be forwarded to the appropriate regional tax office for a ruling.

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19. What should an employer do when he/she discovers that an incorrect amount of notional pay has been put through the payroll system in an earlier pay period?

If an employer needs to amend a previous notional pay figure which he/she discovers is incorrect, the payroll operator should go back to the pay period in question and recalculate PAYE and PRSI. Amendments should then be made to the employee's cumulative pay details and the additional PAYE/PRSI liability due should be deducted from the employee in the current pay period. Likewise, any refund of PAYE/PRSI arising from an amendment to a previous notional pay figure should be made to the employee in the current pay period.

If the incorrect notional pay amount affects the employee's PAYE liability only, this can be rectified in the current pay period without revisiting the earlier pay period. However, as there are implications for PRSI allowances and PRSI class, it is necessary to go back to the pay period where the notional pay error arose to recalculate the PRSI liability.

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III. Company Car/Company Van Issues

1. What is the position if I do very little private mileage in my company car?
2. There are new procedures relating to the taxable benefit for 'company vans'. Will these be implemented on a retrospective basis?
3. If an employee only has restricted access to a vehicle, for example, only allowed to use the vehicle two days a week, how will the taxable benefit be calculated?
4. What kind of evidence can an employer accept in order to apply a discount to the Original Market Value of a company vehicle provided to an employee for the purposes of calculating the 'cash equivalent' of the benefit?
5. What happens if a capital sum paid by an employee towards a company car is not fully set off in the first year?
6. What kind of record keeping are employers required to keep in relation to establishing the business mileage incurred by an employee?
7. How do you arrive at the taxable benefit for a motorcycle provided by the employer?
8. Where an employer provides a minibus to pick up employees/drop them home, what is the position. This would be common late at night, early in the morning where no public transport is available?
9. Does the payment of toll charges by an employer for an employee give rise to a taxable benefit?
10. Is the private use of lorries liable to PAYE/PRSI?
11. Where an employee who has the use of a company van goes directly to work from home in the morning and brings the van home every evening, will there be a taxable benefit?
12. Are all vans exempt from the benefit in kind charge following the Ministers recent announcement?
13. Are cars exempt from the benefit in kind charge where all the conditions set out in the Minister 's announcement are satisfied?
14. Is a crew cab a van or a car? Is a Jeep a van or a car?
15. What is the position if the vehicle is adapted?
16. If I have a car and I take out the backs seats and black out the rear side windows, is the vehicle now a van? What is the position if I put in back seats and fit rear windows in a van?
17. A company has several sites located all over the country. It is impractical to bring back the van to a central location (the employers premises) every night. If the van is brought home by an employee, does a taxable benefit arise?
18. In the case of Van which forms part of a Van Pool, will Revenue accept a Tachometer/Tripmeter reading taken each Friday evening and again on Monday morning to show that no private mileage was done over the weekend?
19. Company A is a UK registered company who provides staff to Company B (a Dublin based company) in return for a management fee (which includes the cost of the employee's salary). Company B provides a company car to the employee who carries out his duties in Dublin. What is the position in relation to the benefit-in-kind arising from the availability of the company car for the private use of the employee?
20. What is the position where for example a car distributor gives an award to the sales person of the year (the sales person could be from one of a number of garages i.e. an employee of the garage not the car distributor)?
21. Can an employer use their own system for calculating the taxable benefit arising from the use of a company car or must they use the ready reckoner provided in the Employer's Guide to operating PAYE and PRSI on certain benefits?
22. Give an example how the ready reckoner works where the employee is on holiday and the business mileage stays the same.
23. I am a travelling sales representative. Generally, I operate from home and I travel between customers during the day. What do I record as business mileage?
24. What evidence will Revenue accept where the private mileage for a company car is less than 5,000 miles?
25. What is the situation where the employee pays for private fuel while using a company car for work purposes?
26. Is there any taxable benefit where company vans kept at the employers' premises?
27. In the case of second hand cars can an employer use the cost rather than the original market value for the purposes of calculating the taxable benefit?
28. Where the employer pays car tax and insurance for an employee's private car, is that a benefit?
29. What is the position if most (but not all) of the car pool criteria are satisfied?    

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1. What is the position if I do very little private mileage in my company car?

In the absence of evidence to the contrary, the minimum private mileage that an employer may accept for the purposes of calculating notional pay will be 5,000 miles per annum. A claim by an employee that lower private mileage occurred must be accompanied by reliable documentary evidence which must be retained by the employer.

Where the private mileage is in excess of 5,000 miles per annum, the actual figure must be taken for the purposes of calculating the notional pay.

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2. There are new procedures relating to the taxable benefit for 'company vans'. Will these be implemented on a retrospective basis?

The Finance Act 2003 did not introduce a new tax charge for vans. Under existing legislation (which applies up to 31 Dec 2003), the private use of a company van is taxable. The basis for calculating the benefit in kind on a company van has changed with effect from 1 Jan 2004. The new rules do not apply retrospectively.

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3. If an employee only has restricted access to a vehicle, for example, only allowed to use the vehicle two days a week, how will the taxable benefit be calculated?

Where the vehicle is kept on the company premises for the remaining five days of the week and the employee or the employee's spouse or any member of his or her household is prohibited from using the vehicle and does not in fact use the car during those days then the taxable benefit should be computed by reference to the number of days the vehicle is available for private use.

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4. What kind of evidence can an employer accept in order to apply a discount to the Original Market Value of a company vehicle provided to an employee for the purposes of calculating the 'cash equivalent' of the benefit?

For a discount to apply, it must be shown that:

(a) the discount was actually received and
(b) the discount was normally obtainable in a single retail sale in the open market.

Generally, the bill of sale should indicate the actual price paid (which can easily be compared to the list price) thus indicating the amount of the discount.

Where the discount received was greater than 10%, employers are advised to obtain evidence from the vendor (the garage) i.e. written confirmation that the discount received was also obtained in single retail sales to other third parties. If this confirmation cannot be obtained the maximum discount that can be applied for the purposes of calculating the cash equivalent is 10%.

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5. What happens if a capital sum paid by an employee towards a company car is not fully set off in the first year?

Any balance of the lump sum contribution that could not be set off in the first year may be taken into account in computing the taxable benefit (the notional pay) in the second year.

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6. What kind of record keeping are employers required to keep in relation to establishing the business mileage incurred by an employee?

Employers must put in place some mechanism whereby business mileage covered by employees is recorded e.g. the employee could keep a log book showing business journeys.

This is not a new requirement. Under existing arrangements, (which applied up to an including the 2003 tax year) employers are required to keep similar records for the purposes of completing forms P11D annually. Also, employees using the alternative basis for calculating benefit in kind on a company car are required to keep a log book under existing arrangements. The log book must be certified by the employer, as being to the best of his/her knowledge and belief, true and accurate.

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7. How do you arrive at the taxable benefit for a motorcycle provided by the employer?

For motorcycles less than 410 kilograms, the annual taxable benefit is calculated at 5% of the market value of the motorcycle when it was first provided plus any other annual expenses paid in connection with same e.g. insurance, tax, petrol and repairs etc. less any amount made good by the employee to the employer. Motorcycles over 410 kilograms are within the definition of a car for benefit in kind purposes and the taxable value must be calculated on the same basis as a car.

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8. Where an employer provides a minibus to pick up employees/drop them home, what is the position. This would be common late at night, early in the morning where no public transport is available?

While this arrangement does constitute a benefit, PAYE/PRSI need not be applied to the benefit arising provided the following conditions are met:

1. The bus service is provided to transport employees on journeys that are between the home and a workplace or between workplaces
2. The bus service is available to employees generally whether or not all of the employees use the service.
3. The main use of the service is for qualifying journeys for employees.

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9. Does the payment of toll charges by an employer for an employee give rise to a taxable benefit?

Whether or not a taxable benefit arises will depend on the nature of the journey undertaken by the employee. If the employee is traveling to and from work and pays toll charges which the employer reimburses, the reimbursement should be put through the payroll and PAYE/PRSI charged.

Reimbursement of toll charges incurred on business journeys may be paid free of tax.

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10. Is the private use of lorries liable to PAYE/PRSI?

Where a lorry is available for private use, a taxable benefit arises.

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11. Where an employee who has the use of a company van goes directly to work from home in the morning and brings the van home every evening, will there be a taxable benefit?

Where a van is available for private use, a taxable benefit arises. However, such private use will not be taxable where the following conditions are met:
(1) the van is supplied by the employer to the employee for the purposes of the employee's work,
(2) the employee is required by the employer to bring the van home after work,
(3) apart from travelling from work to home and back to work, other private use of the van by the employee is forbidden by the employer, and there is in fact no other private use,
(4) in the course of his or her work, the employee spends at least 80% of his or her time away from the premises of the employer to which he or she is attached.

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12. Are all vans exempt from the benefit in kind charge following the Ministers recent announcement?

No. Where all of the conditions outlined in the Minister for Finance's statement (as set out in the answer to the previous question) are not satisfied, the taxable benefit is 5% of the original market value (VAT/VRT inclusive) of the van less any amount made good by the employee directly to the employer.

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13. Are cars exempt from the benefit in kind charge where all the conditions set out in the Minister 's announcement are satisfied?

No. The exemption from the benefit in kind charge is confined to vans only.

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14. Is a crew cab a van or a car? Is a Jeep a van or a car?

How the vehicle is treated depends on whether it falls within the definition of a 'car' or the definition of a 'van'.

Essentially, a 'car' means; any mechanically propelled road vehicle designed, constructed or adapted for the carriage of the driver or the driver and one or more persons other than (a) a motorcycle, (b) a van or (c) a vehicle not commonly used as a private vehicle and unsuitable to be so used. The definition of a car includes motorcycles over 410kgs.

A van means a vehicle which was designed or constructed solely or mainly for the carriage of goods or other burden, and which has a roofed area or areas to the rear of the driver's seat and no seats or side windows in that area.

Adapting say a four - seater crew cab (e.g. taking out the back seats) would not change the vehicle from being a car to a van, as subsequent adaptation cannot alter the original purpose of design or construction. Even with the back seats removed, the vehicle would still be classed as a car for benefit in kind purposes having regard to the original construction. If the vehicle does fall into the definition of a van, the vehicle is not automatically excluded from the benefit in kind charge. There will be no charge to tax, where all of the following conditions are satisfied:

(1) the van is supplied by the employer to the employee for the purposes of the employee's work,

(2) the employee is required by the employer to bring the van home after work,

(3) apart from travelling from work to home and back to work, other private use of the van by the employee is forbidden by the employer, and there is in fact no other private use,

(4) in the course of his or her work, the employee spends at least 80% of his or her time away from the premises of the employer to which he or she is attached.

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15. What is the position if the vehicle is adapted? If I have a car and I take out the backs seats and black out the rear side windows, is the vehicle now a van?

No. A car is defined as any mechanically propelled road vehicle designed, constructed or adapted for the carriage of the driver or the driver and one or more persons other than (a) a motorcycle, (b) a van or (c) a vehicle not commonly used as a private vehicle and unsuitable to be so used. Subsequent adaptation of the vehicle does not alter the fact that the vehicle was designed, constructed for the carriage of one or more persons.

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16. What is the position if I put in back seats and fit rear windows in a van?

Once there are rear seats fitted etc, the vehicle no longer satisfies the criteria to be regarded as a van for benefit in kind purposes. Therefore, the vehicle should be treated as a car and the taxable benefit calculated accordingly. For the purposes of calculating the taxable benefit, the employer should consult the relevant regional office for a ruling on the Original Market Value that should be used.

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17. A company has several sites located all over the country. It is impractical to bring back the van to a central location (the employers premises) every night. If the van is brought home by an employee, does a taxable benefit arise?

Where a van is available for private use, a taxable benefit arises. However, such private use will not be taxable where the following conditions are met: -

(1) the van is supplied by the employer to the employee for the purposes of the employee's work,
(2) the employee is required by the employer to bring the van home after work,
(3) apart from travelling from work to home and back to work, other private use of the van by the employee is forbidden by the employer, and there is in fact no other private use,
(4) in the course of his or her work, the employee spends at least 80% of his or her time away from the premises of the employer to which he or she is attached.

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18. In the case of Van which forms part of a Van Pool, will Revenue accept a Tachometer/Tripmeter reading taken each Friday evening and again on Monday morning to show that no private mileage was done over the weekend?

Yes this is acceptable.

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19. Company A is a UK registered company who provides staff to Company B (a Dublin based company) in return for a management fee (which includes the cost of the employee's salary). Company B provides a company car to the employee who carries out his dutie

The facts of each case would have to be ascertained - copies of the contract of employment and terms and conditions of employment - relationship if any between the two companies - copy of contract between the Irish and UK company would have to be submitted to the relevant regional tax office for a ruling.

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20. What is the position where for example a car distributor gives an award to the sales person of the year (the sales person could be from one of a number of garages i.e. an employee of the garage not the car distributor)?

Where arrangements are in place whereby the award is routed through the particular garage, the amount of the award (if cash) or the taxable value of the award should be put through the normal payroll and PAYE/PRSI applied. Where no such arrangements are in place, the car distributor is responsible for remitting the tax and PRSI due on the award.

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21. Can an employer use their own system for calculating the taxable benefit arising from the use of a company car or must they use the ready reckoner provided in the Employer's Guide to operating PAYE and PRSI on certain benefits?

There is no onus on the employer to use the ready reckoner. Whatever method is used, the employer must ensure that the correct PAYE/PRSI is deducted.

Where an employees annual business mileage is known in advance (or the employer estimates what it is likely to be) the total benefit in kind charge can be estimated at the beginning of the year and the resultant notional pay may be averaged out over the relevant pay periods

e.g. Original Market Value €20,000

Estimate Business Mileage 18,000

Notional pay is €20,000 X 24% = €4,800 per annum or €92.30 notional pay per week.

However, the employer should make periodic checks of the cumulative business mileage during the year to ensure that the aggregate PAYE and PRSI liabilities for the year are on track having regard to the originally estimated business mileage

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22. Give an example how the ready reckoner works where the employee is on holiday and the business mileage stays the same.

Example

Payroll week 47 (business miles to date 14,500) - Use Pay week 47 Band 2 (13559 to 18077)

Payroll week 48 (business miles still 14,500 - say employee on holiday) - Use Pay week 48 Band 2 (13847 to 18462)

Payroll week 49 (business miles still 14,500 - say employee on holiday) - Use Pay week 49 Band 2 (14136 to 18846)

Payroll week 50 (business miles now 15,000) - Use Pay week 50 Band 2 (14424 to 19231)

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23. I am a travelling sales representative. Generally, I operate from home and I travel between customers during the day. What do I record as business mileage?

Where an employee proceeds on a business journey directly from home to a temporary place of work (rather than commencing that business journey from his or her normal place of work) or returns home directly, the business mileage should be calculated by reference to the lesser of -

1. The distance between home and the temporary place of work or
2. The distance between the normal place of work and the temporary place of work

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24. What evidence will Revenue accept where the private mileage for a company car is less than 5,000 miles?

Where an employee claims that his or her private mileage is less than 5,000 miles in the year, the employer must calculate the taxable benefit by reference to a minimum of 5000 private mileage unless the employee provides evidence (which must be retained by the employer) to show that the private mileage is less.

Acceptable evidence would be a log book of business journeys and mileage involved or some other form of account of the business miles done. The private mileage can be calculated by deducting the recorded business mileage from the total mileage according to the milometer reading.

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25. What is the situation where the employee pays for private fuel while using a company car for work purposes?

Where an employee pays for his own private fuel which does not involve a direct contribution to the employer, the amount expended by the employee is ignored for the purposes of calculating the taxable benefit.

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26. Is there any taxable benefit where company vans kept at the employers' premises?

Where the van is part of a van pool, there will be no taxable benefit

A van can be treated as being in a van pool if-
(a) the van is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
(b) any private use of the van by the employees is merely incidental to business use, and
(c) it is not normally kept overnight at the home of any of the employees.

Where a van is not part of a van pool but kept at the employers premises on days off and at weekends, picked up from there each working day to be used for business purposes throughout the day and dropped back there every evening and any private use during the day is merely incidental, no taxable benefit arises.

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27. What cost is used for second hand cars?

In other words, in the case of second hand cars can an employer use the cost rather than the original market value for the purposes of calculating the taxable benefit?

No. The taxable benefit must be computed by reference to the original market value of the car.

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28. Car tax and insurance?

Where the employer pays car tax and insurance for an employee's private car, the amount paid by the employer is a taxable benefit.

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29. What is the position if most (but not all) of the car pool criteria are satisfied?

Once all the criteria -
(a) the car is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
(b) any private use of the car by the employees is merely incidental to business use, and
(c) it is not normally kept overnight at the home of any of the employees are satisfied, no taxable benefit arises.

If any of the criteria are not satisfied, a taxable benefit arises. 

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IV Accommodation Matters

1. Hotel Staff - Accommodation provided in the hotel or in Staff accommodation near the company premises? How is this viewed under the new arrangements?
2. Where nursing staff are provided with accommodation, will this give rise to a taxable benefit?
3. Where a room / accommodation is provided for a company manager in the company premises in the event that he or she has to work late or has to stay over occasionally and the employee's spouse or family members are not entitled to stay in the accommodation, does this give rise to a taxable benefit?
4. What is the position in respect of accommodation provided to Au Pairs?
5. Where a