Benefit-in-Kind
aka BIK
Tax charged on non-cash perks (company cars, vans, accommodation, low-interest loans) provided to Irish employees. BIK is added to gross pay and taxed via PAYE.
Last reviewed April 2026
Definition
Benefit-in-Kind (BIK) is the tax treatment of non-cash benefits an employer provides to employees, directors or their families. The most common BIK in Irish payroll is the company car or van, where BIK is calculated as a percentage of the original market value (OMV) of the vehicle, with the percentage now varying by vehicle CO2 emission band under the Finance Act 2019 framework. Other benefits in kind include preferential loans (where the imputed interest is taxed), employer-provided accommodation, private medical insurance paid by the employer, and personal use of company assets. The cash-equivalent value of the benefit is added to the employee's gross pay each pay period and taxed through PAYE, USC and PRSI in the normal way. From 1 January 2023, electric vehicles received a temporary annual reduction (originally EUR 35,000, tapering year by year), so payroll software must apply the correct OMV reduction depending on the year and the vehicle category. BIK on company vans uses a flat rate of 8% of OMV (subject to qualifying conditions), and home-charging electricity reimbursements have their own rules.
Why it matters for software choice
Mis-coded BIK (especially on company cars and electric vehicles) is one of the most common Revenue audit findings on Irish SMEs. Payroll software that applies the correct CO2 banding per vehicle and adjusts annually as the EV taper phases out makes BIK compliance a configuration job rather than a manual calculation.
Authority sources
- Revenue: Benefit-in-Kind (BIK) (www.revenue.ie)
Software categories this affects
Vendors covered by this term
BrightPay
Award-winning Irish payroll with full PAYE Modernisation and Revenue integration
Collsoft Payroll
Irish payroll built for construction and mid-size businesses with RCT and CSO reporting
Sage Payroll (Ireland)
Irish payroll from Sage with PAYE Modernisation and Revenue submissions
Surf Payroll
Irish payroll module from Surf Accounts for bureaus and small businesses
Thesaurus Payroll Manager
Ireland's most affordable PAYE-compliant payroll at just EUR 175 per year
Related terms
PAYE Modernisation
Ireland's real-time payroll reporting regime, introduced by Revenue on 1 January 2019. Every payroll run must submit data to Revenue on or before the date employees are paid.
Universal Social Charge
Irish payroll tax on gross income deducted at source by employers via PAYE and reported in real time under PAYE Modernisation. Bands, rates and exemption thresholds are set in the annual Finance Act.
PRSI (Pay Related Social Insurance)
Ireland's social insurance contribution deducted at source by payroll. Most employees are on Class A1, with employee PRSI at 4.1% and employer PRSI at 8.9% (lower rate) or 11.15% (higher rate) from October 2024 rates.