Due to the Covid-19 pandemic, certain changes and concessions have been made to the taxation of Benefits-in-Kind (BIK), explains Nikki Johns.
At the time of writing, Revenue have put in place a number of measures to help employers cope with the Benefit-in-Kind tax aspects of the Covid-19 pandemic.
An employer may perform Covid-19 testing on an employee, engage a third party to test an employee, or provide a test kit to an employee without a BIK charge arising.
An employer may arrange for their employees to get the flu vaccine at the workplace, pay directly for an employee to get the vaccine, or reimburse the employee for the cost of the vaccination without any BIK charge arising.
Reimbursement of Costs Relating to Holiday/Flight Cancellations
For 2020: In circumstances where an employee was required to return to work urgently to deal with issues relating to the Covid-19 crisis, the employer can reimburse the associated costs. BIK will not arise if the costs are reasonable and the employee is not otherwise compensated (eg through insurance).
This concession ceased to apply on 31 December 2020. From 1st January 2021, the usual provisions relating to non-business travel will apply.
Office Equipment for Remote Working
An employer may provide office equipment to an employee to facilitate working from home during the pandemic. Equipment provided may include computers, printers, scanners, and office furniture. The usual eWorking tax-free payment of €3.20 per workday continues to apply.
Where an employee has access to a company car for private use, BIK would normally arise. However, normal BIK rules may be altered in the case of the following situations:
- Where an employer takes back possession of the vehicle and the employee has no access to the vehicle, no BIK shall apply for that period;
- Where an employer prohibits an employee from using the vehicle, no BIK will apply where there is no private use;
- Where the employer allows use of the vehicle but use is reduced due to Covid-19, the business mileage travelled in January 2020 may be used as a base month for the calculation of the BIK due for the duration of Covid-19 restrictions.
- Where an employee did not have any business mileage for their current role in January 2020, a reasonable alternative may be used to calculate the mileage for 2021. This should have regard to the specific role carried out by the employee and the business travel they would likely undertake in the absence of any Covid-19 related restrictions.
An employer may pay for a taxi to transport an employee to or from work due to health and safety concerns. No BIK will apply for the duration of the Covid-19 pandemic period.
Small Benefit Exemption
A small benefit exemption allows employers to give employees one voucher or gift per year to the value of €500 tax-free. Where employees are frontline workers or other key staff, the requirement to only issue one voucher/gift per year has been waived. The total value may still not exceed €500, but the value may be split over more than one gift.
A BIK will not arise where an employer incurs reasonable costs in hosting a virtual seasonal party for their employees. These costs may include the provision of food and drink to employees in advance of or during the event. The event must be open to all employees.
This concession does not apply to vouchers provided to enable employees to purchase food or drink.
Where an employer provides temporary accommodation to an employee to mitigate against potential Covid-19 transmission risks, no BIK charge will arise. This exemption applies only where the accommodation is temporary in nature. An example of appropriate use is where an employee requires self-isolation on return from an overseas trip, or where there is a concern of transmission to frontline workers residing in the same household.
Refund of Health Insurance Premiums
Due to Covid-19, some healthcare insurers are issuing refunds of premiums. The treatment of these refunds is as follows:
- Where the employer receives the refund, the BIK value must be reduced to reflect the new gross value of the policy
- Where the refund is split between the employer and the employee, the amount subject to BIK must be reduced to reflect the new gross value of the policy and the amount of any refund made to the employee is subject to BIK.
Need more information or assistance?
Further details of all of the measures outlined above is available on the Revenue website.
If, like many employers, you are struggling to keep on top of your payroll at the moment, GroForth can provide assistance. Check out our payroll services page or contact our CEO Sarah Daly to find out more about our services and how we can help.