What is Benefit-in-Kind on a Car?

The Benefit-in-kind on a car, made available by an employer for an employee's private use, is 30% of the original market value of the car, where the employer also pays for all the normal running costs. The original market value is the cost of the car when purchased new and includes Vehicle Registration Tax. However, if the employee pays any of the following costs, the 30% Benefit-in-kind is reduced by:

4.5% (to 25.5%) where employee pays for all private motoring fuel
3% (to 27%) where employee pays for all insurance
3% (to 27%) where employee pays for all servicing and repairs
1% (to 29%) where employee pays for all road tax.

In effect, if an employee pays all of the above running costs of the car, the Benefit-in-kind is 18.5% of the original market value of the car.

This does not take into account further reductions for buisness mileage, also a new system for calculating the taxable benefit arising from the provision of a company car based on CO2 emissions came into effect from 1 January 2009. It only applies to new cars which are provided after that date. Both will be discussed in a furture article.

If you have any comments or queries please use the comments or email link below or visit our website @ www.cops.ie/benefit-in-kind