Private use of employer provided vans

Calculating the cash equivalent of employer provided vans

The cash equivalent of a van you provide for an employee is 8% of the original market value of the van. Up to 31 December 2022, the cash equivalent was calculated at 5% of the original market value of the van.

If the van has been modified, the original market value should exclude this modification. An example of modification would be where a refrigeration unit has been installed.

If your employee makes payments directly to you for the cost of running the van, the cash equivalent should be reduced by the amount paid.

For 2023, 2024, 2025 and 2026, a reduction of €10,000 can be applied to the original market value of vans for the purpose of calculating the cash equivalent.

This reduction to the vehicle's original market value will continue to apply on a tapered basis for the following years of assessment:

  • 2027 - reduction of €5,000
  • 2028 - reduction of €2,500
  • Example 1

    On 1 January 2026 you provide a van to your employee for business and private use. The original market value of the van is €28,000. Your employee does not pay anything towards the running costs of the van.

    Calculating the value of the benefit for 2026
        Total
    The original market value of the van   €28,000
    Less deduction that applies for 2026   €10,000
    Reduced market value for the purposes of BIK   €18,000
    Cash equivalent/ taxable value of the benefit  €18,000 x 8% €1,440
  • Example 2

    Payment is received from employee.

    On 1 January 2026, you provide an employer provided van to your employee for business and private use. The original market value of the van is €28,000. Your employee pays you €500 annually towards the running costs of the van. The calculation of the value of the benefit is:

    €28,000 less €10,000 = €18,000

    €18,000 @ 8% = €1,440

    Less amount paid by employee €500

    Value of the benefit €940.

    As the value of the benefit is €940, this must be added to their taxable pay for the year. Notional pay of €940 (€78.33 per month) should be added to their wages or salary. Income Tax, PRSI and USC should be calculated on the total amount.

Your employee may not have use of the van for the full year. This may be because your employee:

  • received a van during the tax year
  • gave up a van before the end of the tax year
  • or
  • travelled abroad for work without the van.

Where this happens, you can reduce the cash equivalent to reflect the number of days your employee actually had the van. For example, if the van is only made available for 13 weeks of the year, the ‘cash equivalent’ would be one-quarter of the amount it would be for a full year.

Next: Exemptions and Reductions

Published: 19 December 2025 Print this page

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