Free or subsidised accommodation
Employer-owned accommodation
You may provide free or subsidised accommodation to your employee as a Benefit in Kind (BIK). If you do, they are chargeable under the Pay As You Earn (PAYE) system on this benefit to:
You must calculate the value of the benefit by adding the annual market value of the rent to any related expenses paid by you such as light and heat.
The annual market value of the rent is the amount a landlord would charge an unconnected tenant to use the property. You must be able to show that the market value which you have used is reasonable. You can use a document such as a statement from a local estate agent or auctioneer as evidence. You must keep any documents for inspection.
You should value your property when you first provide it to your employee and review this value every year.
If the property is furnished, this is also a BIK. The value of the benefit is 5% of its value when you first provided it as a benefit.
- Example
Tom let his employee, Alan, use furniture that was previously used by a former employee. The furniture was valued at €5,000 when Tom gave it to his former employee. It is now worth €2,500.
The value of the benefit is based on when Tom first let his employee use the furniture (when it was worth €5,000).
The taxable value of the benefit to Alan is 5% of €5,000 = €250.
Employee living on business premises
No BIK occurs where your employee is required to live in accommodation that is provided by you on part of your business premises.
Your employee must need to live on the premises to perform their duties for the BIK exemption to apply. This requirement is usually met where:
- your employee is required to be on call outside normal hours
- your employee is frequently called out
- and
- you provided the accommodation so your employee could access work quickly.
Subject to the relevant conditions being met, qualifying examples may include:
- care staff in residential or respite centres
- prison governors and chaplains
- caretakers living on the premises
- student nurses living on a hospital campus.
An employee, in this case, cannot be a director.
You are required to determine whether the exemption applies, based on the facts and circumstances.
Rented accommodation
If you lease accommodation in your own name and make it available to your employee, this is a BIK. If you pay the market rate for this accommodation, the total benefit will be:
- the cost of the rent
- less
- any payments the employee makes to you.
If you pay rent on the lease of accommodation held in your employee’s name, this is a perquisite. Generally, a perquisite refers to something which is money, or which can be turned into money. The total benefit will be the amount you paid less any amount made good by the employee.
Accommodation plus meals at a temporary work location
Your employees may occasionally work at temporary locations. You can provide accommodation and meals instead of paying subsistence or country money. This is not a taxable BIK if:
- the accommodation is not your employee’s private home
- the cost of the rent paid by the employer is reasonable
- and
- the reimbursement as regards meals represents no more than a reasonable reimbursement of the actual cost.
Covid-19 pandemic
Revenue introduced a concessionary measure regarding temporary accommodation due to the COVID-19 pandemic.
For further information, please see Section 5 of Tax and Duty Manual Part 05-01-01c.