Miscellaneous Benefit-in-Kind FAQs

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Will there be any communication from Revenue to Employees on this issue.

A preliminary issue of certificates of tax credits and standard rate cut-off point for 2004 issued recently containing a brief notice regarding the application of PAYE / PRSI to certain benefits with effect from 1 Jan 2004. All employees who had benefit in kind included in their certificate of tax credits and standard rate cut-off point for previous years received this notice indicating that the benefit in kind amount has been deleted for 2004.
A further notice will be included in the issue of certificates (incorporating the Budget increases) for 2004.

Will there be an Employees guide or information leaflet?

Revenue Leaflet IT 20a sets out the position regarding the taxation of Benefits from Employment received since the 1st of January 2004.

An employee will shortly be made redundant and receive a lump sum payment. The employee currently have the use of a company car and will continue to have the use of that car for approx 1 year after cessation, until the lease expires, at which time the car will then be returned to the employer. Should the value of the car use be included as notional pay or is it part of the termination payment?

The treatment of the use of the company car will depend on the facts prevailing in each case and in particular the employee's terms of employment and terms of any severance agreement / termination package. Generally speaking, if the continued use of the company car forms part of the termination package and was not provided for in the employee's contract of employment, then the relevant taxable value should be included as part of the termination payment, and taxed accordingly, otherwise it should be treated as notional pay. Cases of difficulty should be referred to the appropriate regional tax office with a view to seeking a determination on the correct treatment.

Does a taxable benefit arise where as a result of a company raffle or draw for employees, an employee receives a non-cash prize for best performance?

A taxable benefit will arise in these circumstances. However, where the prize is in non-cash form, if the value is less than €250 and no other non-cash benefits has been received by the employee during the year, PAYE/USC/PRSI need not be applied (covered by the one off small benefit exclusion). With effect from 22 October 2015 the limit of €250 is increased to €500. Note if the small benefits exemption of €250 was applied prior to 22 October any additional vouchers after that date will be subject to PAYE/USC/PRSI. as only one voucher or benefit may be given in any year.

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Define 'tangible articles' in regard to Long Service Awards.

Tangible articles refer to awards given in a form other than vouchers, bonds or cash for example a gold watch.

Are Exceptional Performance Awards taxable?

Exceptional Performance Awards in cash have always been and continue to be taxable; there has been no change in this regard. Such awards must be put through the payroll and PAYE/USC/PRSI must be applied. Where the award is non-cash format e.g. in the form a gift, the value of the gift must now be treated as notional pay and PAYE/USC/PRSI applied.

Is the loan of an art object subject to tax?

Yes, with effect from 1 January 2010 all such objects will be taxable. The taxable benefit will be calculated as being 5% of the market value of the object. Prior to 2010 there is no tax charge in the treatment of certain art objects loaned i.e. the loan of art objects kept in buildings of significance where the Revenue Commissioners have determined that members of the public have reasonable access to view both the object and the significant building.

How is the notional pay calculated on a joint preferential loan where only one spouse is an employee?

In the case of a married couple the notional pay must be calculated by reference to the entire loan - not just half - and is treated as notional pay of the spouse in employment. PAYE/USC/PRSI in respect of the full amount of the notional pay must be deducted from the actual cash salary of the spouse in employment.

Where the loan is in the joint names of two individuals who are not married and only one of them is an employee, the notional pay must be calculated by reference to the portion of the loan applicable to the employee.

Example

Preferential loan of €100,000 granted by an employer in the joint names of an employee and his partner (who is not an employee of the company) at 2% for the purpose of purchasing their private residence.

The interest chargeable in 2004 is €2,000

The interest chargeable at the specified rate is €3,500 (€100,000 x 3.5%)

Employee's Taxable Benefit €1,500 x 50% = €750

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Preferential Loans - Should the interest payable at the specified rate be calculated on a reducing balance during the year as the loan is being paid back in instalments?

There are various methods used how interest can be calculated e.g. on a reducing balance basis, by reference to the amount outstanding at the start of each year or by reference to the amount outstanding at the mid point of each year. Whatever basis the employer uses to calculate the interest payable at the preferential rate, he or she should use the same basis for calculating the interest payable at the specified rate e.g. if the actual interest is calculated on a reducing balance basis, the interest at the specified rate should also be calculated on a reducing balance basis.

What is the position in relation to preferential loans that continue after the employee has retired. Are these taxable benefits?

Preferential loans that continue after an employee has retired remain chargeable. However, where the former employee is not in receipt of cash emoluments from the employer or from a person connected with the employer e.g. pension, PAYE/USC/PRSI need not be applied but the benefit should be reported on Form P11D.

Where the employee is in receipt of cash emoluments from the employer or from a person connected with the employer e.g. pension then the employer or the person connected with the employer must operate PAYE/USC/PRSI on the notional pay arising.

Does the small benefits exemption apply to a one off benefit or can it apply to several small benefits e.g. 4 vouchers of €25 during the year?

The small benefits relief applies to a one off benefit in the year. If an employer is providing small benefits on an ongoing basis, e.g. €25 voucher every so often, the first voucher may be ignored and all subsequent vouchers must be taken into account as notional pay.

What is the position if an employer pays taxi fares for an employee?

The payment of taxi fares for non-business journeys (e.g. travel to and from work) constitutes a taxable benefit. However, PAYE/USC/PRSI need not be applied to the benefit arising from the provision of taxi transport on an irregular basis to an employee where the employee is required to work late (after 10.00pm) by the employer and the provision of the taxi transport is provided to ensure the safety of the employee. In all other circumstances, PAYE/USC/PRSI must be applied to such outlays unless the travel is in the nature of business travel. Where the taxi is shared by more than one employee, an apportionment will be necessary.

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What is the position in relation to a contribution paid by an employer to the employee's social club?

Where the social club is organized for staff generally, and membership is available to all employees, PAYE/USC/PRSI need not be applied to any reasonable contribution made by the employer to the club. Where the employer has any difficulty in determining whether or not a taxable benefit arises, the relevant regional tax office should be consulted with all of the relevant facts.

How are Bonus Bonds treated?

The expense incurred by the employer on the bonus bonds (on the understanding that the amount realisable by the employee would not be significantly greater than the such expense) should be put through the payroll and PAYE/USC/PRSI applied.

Some of the bonus bond schemes operate on the basis that bonus points are purchased by the employer and awarded to the employees, who are then in a position to draw down on the points and purchase goods and services to the value of the points accumulated. In these circumstances, PAYE/USC/PRSI should be operated by reference to the date the points are awarded to the employees.

(Where there is an agreement between the employer and the employee that the employer will pay the PAYE/USC/PRSI liabilities, the net benefit must be re-grossed at the employee's marginal rate of tax and PRSI and except where the benefit is regarded as minor and irregular the re-grossed amounts should be put through the payroll).

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Are vouchers under €250 exempt?

No. The €250 small benefits relief is a yearly small benefits relief and applies to a one off benefit not exceeding €250 up to and including 21 October 2015. The upper limit has been increased from €250 to €500 from 22 October 2015. If an employer gives each employee one single voucher (€250 in the period 1 January to 21 October 2015 and €500 from 22 October to the 31 December 2015) in the year, the value of the voucher can be disregarded for PAYE/USC/PRSI purposes. If the employer gives two vouchers worth €250 each, the value of the first voucher may be disregarded but the value of the second voucher has to be included as notional pay for PAYE/USC/PRSI purposes. If the employer gives one voucher exceeding the limits as stated i.e. €250 up to and including 21 October and €500 after that date then the value of that voucher (the entire amount) must be taken as notional pay.

Are expenses incurred by an employer on meals/overnights subject to PAYE/USC/PRSI?

Revenue Leaflet IT54 sets out the criteria necessary for the payment of tax free subsistence expenses. Unless the criteria set out are satisfied, PAYE /PRSI must be applied to all such expense payments / reimbursements.

What is considered to be an employee's normal place of work e.g. IT / people working at home rather than the office of the employer or working in both places?

Determining an employee's normal place of work is a question of fact that can only be considered based on the specific facts of each case.

For the home to be regarded as the normal place of work, there must be an objective requirement that the duties of the employment have to be carried out there. Doing work at home does not automatically dictate that the home is regarded as the normal place of work e.g. many teachers may prepare work at home but the school is still regarded as their normal place of work. Furthermore, the employer's premises would generally be regarded as the normal place of work for employees where travel is an integral part of their work (involving daily appointments with customers).

Revenue Leaflet IT54 - Employees Subsistence Expenses contains some guidelines on an employee's normal place of work.

Revenue Leaflet IT69 - eWorking and Tax sets out the position in relation to e-Workers, and the treatment of equipment provided by the employer at the employees home (where it is established that the employees home is the normal place or work).

Where the employer has any difficulty in relation to an employee's normal place of work, the relevant regional tax office should be consulted with all of the relevant facts.

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In the case of Long Service Awards, does the exemption apply to over 20 years only? What about awards for over 5 or 10 years service, how are they treated?

For the exemption to apply, the award must be a testimonial to mark service of not less than 20 years. Therefore any benefit provided for 5 or 10 years service must be treated as notional pay and is accordingly liable for PAYE/USC/PRSI.

What is the position in relation to employers incurring the cost of air fares for non-nationals / individuals recruited abroad taking up employment in the State. Is this a taxable benefit?

Yes. However, there may be some measure of relief provided for under the Revenue Statement of Practice IT 1/91 (Removal and Relocation Expenses). pdfSee also page 11 of Tax Briefing No. 31 (PDF, 264KB)

Medical Insurance Relief - Is it taxed at source and is the employee also entitled to a Tax Credit?

Where the employer pays the full premium for employees and the employee does not make good any amount to the employer, PAYE, USC and PRSI must be applied to the gross (pre Tax Relief at Source) premium. To ensure that the employee is granted the relief afforded by TRS, the employee will be given a tax credit (at the standard rate) for the gross premium in his or her certificate of tax credits.

What is the position where the employer pays the medical premium and is partly reimbursed by the employee? How does it impact on the employee's entitlement to Tax Credits?

This is best answered by way of an example:

In this example, the full premium is €1,000 and the employee pays the employer €400, whether by deduction from salary or other method.

Gross Premium is €1,000
TRS (Tax Relief at Source) €200
Net Premium €800
Recovered from employee €400

The employer pays over €800 to the authorised insurer and pays €200 TRS (amount attributable to the €1,000 gross premium) to Revenue.

The taxable benefit (notional pay) is:
Cost to employer €1,000 (€800 premium paid + €200 TRS paid)
Less amount made good by employee €400
Notional Pay €600

The employee is entitled to a tax credit of €1,000 @ 20% in his or her certificate of tax credits.

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A company pays medical insurance on behalf of its employees. It is deducted by Direct Debit from the company on a monthly basis. Is it in order for them to apply the notional pay for this benefit on a monthly basis?

If the employer pays the premium on a monthly basis, the notional pay arising on this benefit can be calculated monthly.

If an employee has a laptop PC and an ISDN lines at home and leaves the employers premises / place of work to continue to work at home, can the employee claim a mileage allowance for the mileage to and from home?

Travel to and from home to work is private mileage. Mileage allowance cannot be paid free of tax in these circumstances.

Where an employee's home phone bill is paid by the employer, is the benefit 50% of the calls cost or 50% of the rental plus calls cost?

If there is no business use at all and the telephone bill is paid by the employer, 100% of the cost to the employer should be taken as notional pay. Where the telephone is used for business purposes and the employer pays for the phone bill, the amount to be taken into account is 50% of the cost to the employer (50% of the phone bill inclusive of the monthly / bi-monthly rental charge). Where a lower private use is proven e.g. 20%, this lower percentage may be taken as the notional pay. (this would have to be evidenced e.g. a periodic analysis of calls made over a given periods and relevant evidence should be retained by the employer).

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Where a corporate credit card is used for both business and private purchases, how are the interest / annual fee charges treated?

Where the employee reimburses the employer for the cost of private purchases, the annual fee and interest charges should not be treated as notional pay.

If the employee does not reimburse the employer for private transactions, the cost of the private purchases must be treated as notional pay

Entertainment Expenses - Are these regarded as notional pay?

The reimbursement of vouched entertainment expenses actually incurred wholly, exclusively and necessarily in the performance of a director's or employee's duties should not be treated as notional pay. [These expenses would not qualify as a deduction in computing the profits of the company].

Does the payment of indemnity insurance by an employer on behalf of directors give rise to a taxable benefit?

The treatment will depend on whether the indemnity insurance is in place to

  1. provide cover for the director personally - proceeds of the policy would go to the director, or
  2. provide cover for the company - proceeds of the policy would go to the company.

If (a) applies the expense incurred by the company is a benefit and PAYE/USC/PRSI must be applied to any contribution made by the company. Where (b) applies there is no taxable benefit.

Where the employer provides free canteen meals to all canteen staff but not to general staff - is the exemption due or not?

The exemption provided for in the legislation dictates that the canteen / meals provided must be available to staff generally. If the canteen / meals are restricted to a set group of staff members, then there is a benefit and the cost must be apportioned between eligible staff.

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My staff get tips from customers. Some are cash from customers. Some via credit cards? How are they treated under the new arrangements?

Where the tips are routed through the employer, PAYE/USC/PRSI must be applied to the amount paid (including employer PRSI). If tips are received directly from patrons, there is no obligation on the employer to operate PAYE/USC/PRSI on the amounts received. (The employees are obliged to declare the tips received in their annual return of income). In the case of credit card tips the employer must operate PAYE/USC/PRSI on the amounts of the tips received.

What is the position where a company pays a pension contribution for one particular employee every year - this employee is a senior executive?

The legislation provides from an exemption from income tax in respect of an expenses incurred by an employer in or in connection with the provision for a director or employee, or for the director's or employee's spouse, children or dependants, of any pension, annuity, lump sum, gratuity or other like benefit to be given on the death or retirement of the director or employee.

Whether or not the exemption applies will depend on the nature of the pension contribution. In general, PAYE/USC/PRSI need not be applied to a contribution by an employer to a Revenue approved pension scheme.

Where the employer is paying into a personal PRSA for the employee, PAYE/PRSI need not be applied to the contribution. USC should be applied up to 31 December 2015. With effect from 1 January 2016 USC should not be applied to these contributions. However, details of the contributions made should be returned by the employer on request on a form P11D.

In the case of an employer's contributions to an RAC on behalf of an employee, in general PAYE/USC/PRSI need not be applied to the extent that the contribution does not exceed the relevant age based limits. However, the employer should consult with the relevant regional tax office in the first instance.

Employees pay into a scheme which enables other employees to obtain loans at a preferential rate. There is no contribution from the employer. However, one of the company directors acts as a trustee.

Full particulars of the scheme should be submitted to the relevant regional tax office for a ruling.

A company engages a licensed carrier to transport their workers from a set point in their home area to work. The employees pay €2 if they use the bus which would be at a preferential rate. The transport is used by a number of employees though all employees do not use it all the time. There is no monthly ticket in place. Is this a taxable benefit?

While this arrangement does constitute a benefit, PAYE/USC/PRSI need not be applied where the following conditions apply:

  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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If an employee uses a company mobile phone for private calls and pays for the private calls, how is the taxable benefit calculated?

Where a mobile phone is provided for business purposes a taxable benefit will not be treated as arising where any private use is incidental. Where the employee reimburses the employer for the cost of private calls, there will be no taxable benefit arising e.g. any taxable benefit is reduced by any amount made good by the employee to the employer.

What is the position in relation to staff discounts?

This is best illustrated by example.

An employer buys goods costing €80 each.
If he allows staff to buy the goods at cost (€80), there is no taxable benefit.
If he allows staff to buy at €50 each, then the taxable benefit is €30 and this must be included as notional pay.

How many incidental/small vouchers can an employer give to an employee in the year?

Just one, up to the value of €250 in the period 1 January to 21 October 2015. The upper limit from 22 October 2015 is €500. The small benefits relief applies to a one off benefit. If an employer is providing small benefits on an ongoing basis, e.g. €125 voucher on a quarterly basis, the first voucher under under the relevant limit may be ignored but PAYE/USC/PRSI must be applied to all subsequent vouchers given to the employee in that year.

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Does the employer who gives out Christmas Hampers or something to the value of €250, add the value of the Hamper/Gift to another benefit (say for example -Medical Insurance paid by the employer), and then take away the €250 and then charge the PAYE/USC/PRSI on the balance?

If an employer is giving a small benefit covered by the one off small benefits relief (€250 or €500 if made after 21 October 2015), the taxable value of the small benefit can be ignored completely for payroll purposes. In the example above, the full amount of the medical insurance premium (gross before TRS) must be included in the payroll. The value of the Christmas Hamper should not be included in the payroll (on the assumption that the small benefit relief has not previously been used by the employee).

What happens if an employee is unable to make use of a golf club subscription paid by the employer e.g. due to long term illness or does not make use of the membership for whatever reason?

The taxable benefit is the cost of the annual subscription to the employer and this amount must be treated as notional pay when the employer incurred that cost. If the employee does not make use of the benefit provided, the position remains unchanged

Arrears - What is Revenue's position in relation to employees who have not previously declared benefits they have been receiving from their employer?

Where benefits provided in the past have not been declared, details should be supplied to the appropriate regional tax district with a view to rectifying the position. In most cases, it should be possible for arrangements to be made to clear the arrears over a period of time - where the quantum of the arrears warrants it, the arrears may be collected by reduction of the employees tax credit over as appropriate.

If the employee works away from base and the employer pays for the hotel, is this a taxable benefit? If an employee is working away for 3 days with his job and is paid subsistence, is this a taxable benefit?

If the expense payments are within the criteria set out in Revenue leaflet IT54 - Employees Subsistence Expenses, no liability would arise. Otherwise, they are taxable and PAYE/USC/PRSI must be operated on the amounts involved.

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Many staff in the hotel and catering industry get free meals? How is this viewed under the new arrangements?

Where the free meals facility is available to all employees generally, PAYE/USC/PRSI need not be applied to the benefit arising provided that the free meals are not provided to the employees in a restaurant or dining room at a time when meals are being served to the public, unless part of the dining room or restaurant is designated for the use of staff only.

It is necessary in certain circumstances for companies to provide security measures and systems for certain directors / senior employees to ensure their safety and security and that of their families. This may be as a result of the profile of the individual or the company, would be done with the protection of the company's business in mind and typically would only arise in relatively rare cases. Does a taxable benefit arise?

Such benefits are chargeable to tax and PAYE/USC/PRSI must be applied to the amounts involved in providing the security measures and systems.

As part of frequent air travel by its employees an entitlement will frequently arise to air miles. Often such entitlements are left by the employer to the employee for use at his / her discretion. While the entitlements arise on foot of travel expenditure incurred by the employer, a cost does not arise for the employer in relation to the provision of this benefit due to the air miles / TAB points having no cost. Does a taxable benefit arise in these circumstances?

PAYE/USC/PRSI need not be applied to the benefit arising to employees in such circumstances.

A company pays the premium for a personal life assurance policy on behalf of an employee. Does this give rise to a taxable benefit?

Yes. The amount of the premium must be taken into account for PAYE/USC/PRSI purposes.

How are uniforms provided by an employer for employees to be treated?

PAYE/USC/PRSI need not be applied to expenditure incurred in the provision of items of protective clothing or clothing bearing logos or of such a colour and design as to be readily identifiable as uniforms (as opposed to regular suits of clothing) where the uniforms remain the property of the employer.

Where the expense incurred by the employer does not fall into this category, the employer should consult with the relevant regional tax office for a ruling.

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Revenue Commissioners
November 2015

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