Benefit-in-kind (BIK) changes during COVID-19 restrictions

Employer-provided vehicles

If you provide your employee with a van or car during COVID-19 restrictions, the following Benefit-in-kind (BIK) rules may apply.

Note

If your employee continues to undertake business travel as usual, the normal Benefit-in-kind (BIK) rules apply. For further information, please see the Benefit-in-Kind, Private use of Employer-Provided Vehicles Tax and Duty Manual.

Employer takes back possession of the vehicle

There will no BIK charge if you take back possession of a vehicle and the employee has no access to the vehicle.

Employer prohibits use

There will be no BIK charge if an employee has possession of a vehicle, but the vehicle cannot be used for private use.

You must keep records to show that you have prohibited private use of the vehicle. For example, communication from you to your employee or photographic evidence of odometer. 

Employer allows private use

If you provide your employee with a vehicle and allow personal use, the business mileage for January 2020 can be used to calculate the BIK due if:

  • the circumstances in the previous example do not apply
  • limited or reduced business mileage (if any) is undertaken during the period of the COVID-19 crisis
  • and
  • personal use is limited.

Business mileage

For the period of the COVID-19 restrictions, the percentage you use to calculate cash equivalent will depend on the actual business kilometres for January 2020.

This will result in business mileage being annualised as it would likely have been undertaken in the absence of restrictions. This concession should mean the BIK charge is not adversely impacted by an employee’s adherence to public health guidance.

This measure applied for the years of assessment 2020 and 2021. For 2022, the measure will only apply for the period of time during which public health guidance required employees to work from home. As public health restrictions due to Covid-19 no longer apply, this measure will cease to apply from 1 June 2022.

You should keep appropriate records. For example, records of business mileage travelled in January 2020, amount of private use and photographic evidence of odometer.

There may be situations where an employee did not have any business mileage for their current role in January 2020.

For example:

  • an employee who has taken on a new role since January 2020
  • or
  • returned to the business travel they would have normally undertaken in the absence of any COVID-19 restrictions. 

In these situations, a reasonable alternative may be used to calculate the annualised mileage.

The reasonable alternative used must have due regard to the:

  • specific role carried out by the employee

and 

  • business travel the employee would likely undertake in the absence of any COVID-19 related travel restrictions.

Use of company cars by employees in the motor industry

There are special rules for employers in the motor industry for determining the cash equivalent of a car when calculating the BIK charge. For more information, please see Employers in the car and motor industry.

These special rules usually only apply if the employee uses one car for a period of one month or less. However, during the COVID-19 crisis, employees working in the motor industry may continue to utilise these rules if:

  • they have availed of the special cash equivalents for calculating BIK on company cars from January 2020
  • and
  • due to current restrictions, are unable to change their vehicle within the required time frame.

This measure applied for the years of assessment 2020 and 2021. For 2022, the measure will only apply for the period of time during which public health guidance required employees to work from home. As public health restrictions due to Covid-19 no longer apply, this measure will cease to apply from 1 June 2022.

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