Valuation of Benefits: General

General Rule

Except where there are specific statutory valuation rules (please refer to: Sections from Private Use of Company Cars to Benefit of Preferential Loans), the amount of the taxable benefit (i.e. the notional pay) which will be liable to PAYE and PRSI will be the higher of:

  • the expense incurred by the employer in connection with the provision of the benefit to the employee, or
  • the value realisable by the employee for the benefit in money or money’s worth

less any amount made good to the employer by the employee.

Back to Top

Payments on behalf of employees - general

In the case of the payment of club subscriptions, medical insurance or other such payments on behalf of the employee, it is the expense incurred by the employer (less any reimbursement by the employee direct to the employer) that is to be taken into account for PAYE and PRSI purposes.

Payment of Medical Insurance / Tax Relief at Source / Tax Credits

In the case of medical insurance premiums, the cost to the employer is based on the invoiced gross premium before TRS (Tax Relief at Source). (The employer has to refund the TRS to Revenue.)

Example 1

Where the gross premium payable (before TRS) is €1,000 and the employee makes good the sum of €300 to the employer, the notional pay is €700.

The employee in the above example will be entitled to a standard rate tax credit in respect of the gross premium, i.e. €1,000 @ 20%, in his or her Certificate of Tax Credits and Standard Rate Cut-Off Point.

Back to Top

Vouchers

Where the amount realisable by the employee for the voucher would not be significantly greater than the expense incurred by the employer in acquiring the voucher, the expense incurred by the employer (as reduced by any reimbursement by the employee) may be taken as the amount of the taxable benefit for PAYE and PRSI purposes.

The taxable benefit cannot, in any case, be less than the expense incurred by the employer (as reduced by any reimbursement by the employee).

Where, because the employer and the provider of the voucher are connected or for any other reason, the expense incurred by the employer in acquiring the voucher is significantly less than the amount realisable by the employee for the voucher, i.e. the market value of the voucher, it is the market value of the voucher (as reduced by any reimbursement by the employee) that is subject to PAYE and PRSI.

Back to Top

Goods Provided by Employer

Where an employer purchases goods for, or otherwise provides goods to, an employee, such as a television, hi-fi equipment, or white goods, the higher of:

  • the expense incurred by the employer in connection with the provision of the goods or
  • the value realisable on sale of the goods by the employee

is chargeable to PAYE and PRSI.

Where the difference between the expense incurred by the employer in providing brought-in goods and the value realisable on sale of the goods by the employee is unlikely to be significant, the expense incurred by the employer may be taken as the amount of the taxable benefit for PAYE and PRSI purposes.

Where the employer is the manufacturer of goods concerned, the amount of the expense incurred in providing the employee with the benefit is normally lower than the amount that the goods would realise if sold on the open market. The higher of the two amounts is subject to PAYE and PRSI.

Where durable goods have been used or depreciated by the employer before being provided to the employee, it is the value of the goods at the time of their provision to the employee that should be charged to PAYE and PRSI even if that value is less than the cost of the goods to the employer.

Back to Top

Transfer of Assets

Where an employer gives an asset (e.g. car, house, or yacht) to an employee by way of transfer or otherwise, the taxable benefit for the year in which the benefit is provided must be calculated by reference to the higher of:

  • the expense incurred by the employer in connection with the provision of the benefit, or
  • the value realisable on sale.

However, where the benefit takes the form of the transfer of an asset after it has been used or depreciated by the employer, it is the market value of the asset at the date of transfer, and not the cost of acquisition to the employer, which is the taxable benefit.

Back to Top

Summary Table for Certain Benefits

The table below sets out:

  • the amount of the notional pay or taxable benefit to be taken into account when calculating PAYE and PRSI, and
  • the date on which the benefit is chargeable.

in relation to some commonly available benefits, which are not subject to the specific statutory rules set out in the following sections:

Commonly available benefits
Benefit Examples Amount for PAYE and PRSI Date of charge
Vouchers Shopping Vouchers,
Holiday Vouchers,
Luncheon Vouchers,
Bonus Bonds and Cash Vouchers		 Expense incurred by employer (less any reimbursement of the employer by the employee).
But See: Vouchers		 Date of receipt by employee
Payment of a pecuniary liability for employee Medical Insurance and Life Assurance Premiums,
Club Subscriptions,
Private element of telephone bills (call and rental charges),
Rented Accommodation charges,
Crèche Costs outside the scope of the exemption provided		 Expense incurred by employer (less any reimbursement of the employer by the employee). Date of receipt by employee
Provision of Goods Electrical goods e.g., TV’s, HiFi’s, White goods The higher of
  • Expense incurred by the employer, and
  • Realisable value,
(less any reimbursement of the employer by the employee). See: Goods Provided by Employer.		 Date of receipt by employee
Transfer of assets Cars, Houses, Yachts The higher of:
  • Expense incurred by the employer, and
  • Realisable value,
(less any reimbursement of the employer by the employee). See: Transfer of Assets.		 Date of receipt by employee

Back to Top

Specific statutory valuation rules

See the specific statutory valuation rules which must be used to determine the taxable value in relation to:

Back to Top


Print this page