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Free use of assets (other than accommodation, company cars or vans)

You might choose to provide your employee with free use of your assets, other than accommodation, company cars or vans. This is a taxable benefit and they will have to pay on that benefit:

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

Value of the benefit

Note

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

The value of the benefit is 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
  • 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 for that portion of the year.

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 IT, PRSI and USC on the taxable benefit. You must report the value of the benefit as part of the director’s gross pay in the period which it is provided.

Free use of ‘lands’

Since 2005, the method for calculating the free use of lands is the same as for premises.

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
  • 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 remained 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 IT, 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 remained Mary's property, cost €15,000.

    The annual value of the use of the furniture is €750. Because Catherine only has use of the furniture from 1 August (five months of the 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. That is €14.42 for each week or €62.50 for each month during the period, for calculating IT, PRSI and USC.

    For future years, notional pay of €750 must be added to Catherine's wages for calculating IT, PRSI and USC. (€14.42 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 €150 is (€3,000 x 5%).

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

  • Example 5

    Five years ago Margaret's company purchased a painting for €5,000. Her company then gives 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 tax on this €250.

    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: 30 July 2021 Print this page

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