Private use of employer-provided vehicles

Exemptions

Car-pools

If your employee uses an employer-provided vehicle in a car-pool they do not have to pay Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) on this benefit.

A car-pool exists where:

• a car is available and used by more than one employee
• the car must not be regularly used by one employee who prevents others from using it
• private use of the car by the employee is minimal
• the car is not regularly kept overnight at or near the employee’s home.

State employees may have to drive a State-owned car as part of their job. They may keep that car overnight at or near their home, if:

• they are on call outside their normal working hours
• the car would otherwise be a ‘pool car’.

If you are unsure if a car is part of a qualifying car pool, please contact your local Revenue Office.

Electric vehicles

Certain Benefit in Kind (BIK) exemptions and discounts are available where the car made available to your employee is an electric car.

Electric cars are cars that get their motive power from electricity only. Hybrid cars do not qualify as electric cars.

The treatment applies to both new and used cars.

2018 exemption

You may have made an electric car available to your employee for private use during 2018. Where this occurred, no charge to BIK arises in respect of any use by your employee in 2018.

2019 to 2022 extension of exemption

You may have chosen to make an electric car available to your employee for private use between 1 January 2019 and 31 December 2022. Where this occurs, a full exemption from BIK is only available in certain circumstances.

No BIK charge to tax arises of:

• any private use of the vehicle by your employee during 2019 or 2020 where either of the following apply:
  • the Open Market Value (OMV) of the car is €50,000 or less
  • or
  • you first made this car available to your employee between 10 October 2017 and 9 October 2018.
• any private use of the vehicle by your employee during 2021 or 2022 where the following applies:
  • the OMV of the car is €50,000 or less.

Where neither of the above apply, only a partial exemption is available. This is granted by reducing the OMV by €50,000 when calculating the cash equivalent for the car.

2023 to 2025 extension of exemption

Your may choose to make an electric car available to your employee for private use in the future. Partial relief will apply in respect of cars made available between 1 January 2023 and 31 December 2025.

This relief applies by reducing the OMV of the vehicle. The reduction which applies is as follows:

• €35,000 in respect of cars made available during 2023
• €20,000 in respect of cars made available during 2024
• and
• €10,000 in respect of cars made available during 2025.

Where the relief reduces the OMV to nil, a BIK charge will not arise. Any OMV in excess of the reduction is liable to BIK in the usual manner.

For further information, please see Tax and Duty Manual Part 05-01-01b.

Next: Other BIK issues