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Free use of assets (other than accommodation, employer-provided cars or vans)

You might choose to provide your employee with free use of your assets for their private use. This is a taxable benefit which will be chargeable under the Pay As You Earn (PAYE) system to:

‘Free use’ means that you allow your employee use the asset without giving them ownership of it.

The guidance outlined on this page applies to both employees and directors.

Value of the benefit

Note

Any payment that your employee makes to you for use of the asset reduces the value of the benefit.

The value of the benefit is the annual value of the use of the asset. This is generally 5% of the market value of the asset when you first provide it as a benefit. The market value is the amount you would have been able to sell the asset for to a stranger.

The market value cannot be changed if:

  • you provide the asset to a different employee
  • the asset is damaged
  • and, or
  • the asset increases in value.

The same charge applies each year you provide the asset. If you provide the asset for only part of the year, you must base your calculation on that portion of the year.

Where the annual amount paid for long-term lease is greater than the annual value, the benefit in kind (BIK) value is the annual amount paid by you.

You must treat all maintenance costs that you pay towards the asset as a taxable benefit. Any payments that your employee makes towards these costs reduces the taxable amount.

You will need to operate Income Tax, PRSI and USC on the taxable benefit. You must report the value of the benefit as part of the employee's gross pay in the period which it is provided.

Loan of art objects

Art objects may be loaned without paying tax in one specific circumstance. They must be kept in a building of significance where Revenue agree that the public have reasonable access to:

  • view the object
  • and
  • the building.
  • Example 1

    On 1 January, John furnishes an employee's apartment with new furniture at no cost to his employee, Tim. The furnishings, which remain John's property, cost €10,000.

    The annual value of the use of the furniture is €500 (€10,000 x 5%).

    Notional pay of €500 (€9.61 per week or €41.66 per month) must be added to Tim’s wages for calculating Income Tax, PRSI and USC.

  • Example 2

    On 1 August, Mary furnishes an employee’s apartment with new furniture at no cost to her employee, Catherine. The furnishings, which remain Mary's property, cost €15,000.

    The annual value of the use of the furniture is €750. As Catherine only has use of the furniture from 1 August (five months out of twelve), the annual value must be time apportioned to €312.50 (€750 x 5/12).

    Mary adds notional pay of €312.50 to Catherine’s wages over the period 1 August to 31 December. This is €14.20 for each week, or €62.50 for each month, during the period for calculating Income Tax, PRSI and USC.

    For future years, notional pay of €750 must be added to Catherine's wages for calculating Income Tax, PRSI and USC (€14.20 per week, or €62.50 per month).

  • Example 3

    On 1 January, Marty provides his employee, Tina, with the free use of an asset. This asset was previously used by another employee, Ann. At the time Ann was given the use of the asset, it cost €3,000. This is the market value of the asset when first provided as a benefit.

    The annual value of the asset for Tina is €150 (€3,000 x 5%).

    Marty adds notional pay of €150 per year (€2.88 per week, or €12.50 per month) to Tina’s wages for calculating Income Tax, PRSI and USC.

  • Example 4

    On 1 January, Bill provides his employee, Eric, with the free use of furniture, which was previously used in Bill's showrooms. The original cost of the furniture was €5,000. It was professionally valued, as of 1 January (when it was first provided as a benefit), to have a market value of €3,500.

    The annual value is €175 (€3,500 x 5%).

    Bill adds notional pay of €175 (€3.36 per week, or €14.58 per month) to Eric’s wages for calculating Income Tax, PRSI and USC.

  • Example 5

    Five years ago, Margaret's company purchased a painting for €5,000. Her company then gave the painting to her managing director to be displayed at his home. The value of the benefit is €250 (5% x €5,000). Margaret's managing director must pay €250 tax on this.

    The painting is now worth €8,000. The calculation of the benefit is still based on the original cost of the painting. If Margaret gave the painting to another employee, the calculation would also still be based on the original cost.

Published: 15 July 2025 Print this page

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