Taxation of benefit-in-kind

Insufficient wages to deduct tax

The tax due on a benefit can be more than your employee's pay. You also might not be able to deduct the full amount of tax in one pay period.

In this case, you must pay the full tax deductible for this period to the Collector-General. This amount will be reflected in your monthly statement.

You should arrange for your employee to repay the difference to you.

Employee does not repay tax

If your employee does not repay the tax to you, you should treat the outstanding amount as a benefit. You must pay income, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) on this benefit.

You must treat this benefit as if you provided it on 28 February of the following year. It should be taxed at the employee's rate of tax.

If your employee repays you the tax in full before 28 February of the following year, no further payment is required.

If the employee stops working for you by 28 February, you must declare the unpaid balance of tax on Form P11D.

Next: Spreading tax over the year