What is benefit in kind?
A benefit in kind is any non-cash benefit of monetary value that you provide for your employee.
These benefits can also be referred to as notional pay, fringe benefits or perks.
The benefits have monetary value, so they must be treated as taxable income.
You must deduct Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) from your employee’s pay on the value of a benefit.
Conditions for taxing benefit in kind
If your employee’s total income, including benefits, is more than €1,905 in a year they must pay tax on their benefits. Income from a previous job is not counted towards the €1,905 limit.
Your employee may have worked for a number of businesses under one parent company. If this is the case, their combined income from these jobs is measured against the €1,905 limit.
If you give a benefit to an employee’s husband, wife, civil partner, family members, dependants or guest, they must pay tax on it.
A company director must pay tax on any benefit in kind, regardless of their total income.
You can give your employee a once-off benefit of up to €500 per year (€250 up to 21 October 2015), tax free. This is detailed in the Valuation of Benefits guide.