Private use of employer provided vehicles

Overview

As an employer, you may provide your employee with a car for private use. Where this happens, your employee has received a benefit in kind (BIK) for the value of that private use. You must deduct Income Tax, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) for this through payroll.

Travel to and from work is generally considered private use.

Your employee will also be liable to a BIK where they have use of a private car because you employ them. This may arise where, for example, a connected party or a third party provides a car for sponsorship purposes. For further details on third party benefits, please see Tax and Duty Manual Part 05-01-01m.

The information in this section applies to you whether you are a company, a partnership or a sole trader.

Note

For the purposes of this section of the website, an ‘employer provided vehicle’ refers to all cars provided to employees from their employer.

A ‘car’ can be any car within the ordinary meaning of the word. It does not include:

• motor-cycles less than 410kg
• vans (please see Private use of company vans)
• or
• vehicles not commonly used as a private vehicle and unsuitable for such use, for example, hearses and lorries.

This section is only applicable where ownership of the car does not transfer to the employee. If you transfer the car to your employee, general BIK rules will apply. For further information, please see Valuation of benefits.

If you pay an allowance to an employee to enable them to purchase a car, this will be taxable salary. Therefore, this section will not apply. For further details of allowances, please see Round sum allowances.

No tax is due if you refund your Employee expenses for the running of their own car. The employee must have incurred the expenses wholly, exclusively and necessarily, in the performance of their duties of employment. 

Revenue introduced a concessionary measure regarding travel restrictions due to the COVID-19 pandemic. For further information, please see Employer provided vehicles in BIK changes during COVID-19 restrictions.

Next: How to calculate the taxable benefit