Whenever a company provides an employee with a non-cash benefit – such as private medical cover or a Company Car that is available for private use – the tax authority deems this to be the supply of a benefit, and the employee is liable for a tax charge. The tax charge is known as the Benefit-in-Kind (BiK).
Which Factors Influence Benefit-In-Kind?
BiK taxation is one of the methods used by the government to achieve its CO2 emissions reduction objectives. It uses a number of attributes to determine how much BiK tax someone should pay. In addition to the taxable value of the car it also takes into account its CO2 emissions (which is used to determine its Benefit-in-Kind Tax band) the type of fuel used, and the employee’s personal tax rate.
If you are supplied with a company van that is also available for private use, the calculation is much simpler. In this situation the tax authority has established a value of €X,XXX for the taxable benefit, plus a further €XXX if you are provided with free fuel for private use. Simply multiply these figures by the highest rate at which you pay income tax to calculate your annual Benefit-in-Kind Tax liability.
If you are supplied with a company van that is also available for private use, the calculation is much simpler. In this situation the tax authority has established a value of €X,XXX for the taxable benefit, plus a further €XXX if you are provided with free fuel for private use. Simply multiply these figures by the highest rate at which you pay income tax to calculate your annual Benefit-in-Kind Tax liability.