Employment Benefits

In this week’s Employment Benefits blog, we’ll take a look at a wider range of benefits/benefits-in-kind that come with certain rules that may reduce the tax liability upon receipt:

• Transfer of ownership of assets/goods
• Free use of assets/goods
• Travel Passes
• Air Miles

There are specific benefits that an employer may provide that are not subject to tax or can be received tax efficiently. Let's review the specifics in relation to these four benefit types:

 

Benefit – Transfer of ownership of assets/goods

An employer may give an asset/good to an employee, this is a taxable benefit. How to calculate the taxable benefit;

• The value of the benefit is the higher of;
  • The cost incurred by the employer providing the asset/good
  • The market value of the asset/good (the amount if sold by the employee)
• If an asset/good has depreciated in value, it is the market value of the asset/good on the date of the gift which is the taxable benefit

 

Benefit – Free use of assets/goods (other than accommodation, company cars or vans)

An employer may allow an employee free use of an asset/good other than accommodation, company cars and vans, this is a taxable benefit. How to calculate the taxable benefit;

• The market value of the benefit is the amount a stranger would of paid for the asset/good
• The benefit is 5% of the market value when it is first provided
• Same charge applies each year the asset/good is provided
• If the asset/good is only available for part of the year, the calculation if reduced to reflect the amount of days the asset/good was available for
• Maintenance costs of the asset/good must be included
• Benefit amount is reduced if the employee contributes towards costs
• Market value of the asset/good cannot be changed if;
  • The asset is provided to a different employee
  • The asset is damaged
  • The asset increases in value

 

Benefit – Air Miles

An employee may receive air miles because of frequent air travel for work. This is not a benefit-in-kind and is not taxable.      

Benefit – Travel Passes

An employer may pay for a monthly or annual travel pass for an employee; this is not a taxable benefit-in-kind if it meets the salary sacrifice arrangements.  It is important to note that; 

• The travel pass can be for bus, train, luas and ferry services. 
• Must be issued by public or private operator who holds a valid license
• Must be a revenue approved salary sacrifice arrangement 
  • The arrangement will change the terms and conditions of employment
  • It must be recorded in writing 
  • It cannot be for a period before the agreement was put in place
  • The benefit cannot be exchanged for cash
  • The benefit cannot be passed to the employee’s family