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Private use of employer-provided vans

  1. Overview
  2. Calculating the cash equivalent of employer-provided vans
  3. Van allowances
  4. Exemptions from Benefit-in-Kind (BIK)

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 (OMV) of the van. Up to December 2022, the cash equivalent was calculated at 5% of the OMV of the van. If the van has been modified, the OMV should exclude this modification. An example of modification would be where a refrigeration unit has been installed.

If your employee pays for the cost of running the van, the cash equivalent should be reduced by the amount paid.

When you have determined the cash equivalent, you should deduct the following from the total amount:

For 2023 and 2024, a reduction of €10,000 can be applied to the OMV of vans for the purpose of calculating the cash equivalent.

  • Example 1

    On 1 January 2024, you provide a van to your employee for business and private use. The OMV 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 2023
        Total
    The OMV of the car   €28,000
    Less deduction that applies for 2024   €10,000
    Reduced OMV 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 2024, you provide an employer-provided van to your employee for business and private use. The OMV 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:

    OMV 28,000 less €10,000 = €18,000

    €18,000 x 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 (€18.07 per week or €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 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: Van allowances

Published: 25 January 2024 Print this page

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