A benefit-in-kind (BIK) is any non-cash benefit of monetary value that you provide for your employee.

These benefits can also be referred to as notional pay, fringe benefits or perks.

The benefits have monetary value, so they must be treated as taxable income.

You must deduct Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) from your employee’s pay on the value of a benefit.

Conditions for taxing BIK

If your employee’s total income, including benefits, is more than €1,905 in a year they must pay tax on their benefits. Income from a previous job is not counted towards the €1,905 limit.

Your employee may have worked for a number of businesses under one parent company. If this is the case, their combined income from these jobs is measured against the €1,905 limit.

If you give a benefit to an employee’s spouse or civil partner, family members, dependants or guest, they must pay tax on it.

A company director must pay tax on any BIK, regardless of their total income.

Small benefits

From 1 January 2022 you can give employees up to two small benefits, tax free, each year. This will qualify as a Small Benefit Exemption.

Courtesy https://www.revenue.ie