Taxation of benefits from employment
Most benefits from employment that you get in addition to your salary are taxed.
Generally, there are two types of benefits you can get from your employer in addition to your salary:
- Benefits-in-kind. These are benefits that cannot be converted into cash but have a cash value. They are usually something that an employee has the use of without owning it. Examples include loans at a special rate or the use of a company car or accommodation.
- Money or other benefits that can be turned into money. Examples include tickets to events, vouchers or having your bills paid by your employer.
How benefits are taxed
Most benefits are added to your pay and taxed in the same way. Your employer deducts income tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the benefit.
The rules applying to benefits-in-kind vary. Generally, the value of the benefit is the higher of:
- The cost to the employer
- The market value of the benefit
If the employee contributes an amount towards the benefit, the taxable value of the benefit is reduced by that amount.
Special rules apply to the following benefits-in-kind:
Benefits that are exempt from tax
Benefits are usually not taxable if you earn less than €1,905 from your employer in the tax year . This exemption does not apply to company directors.
There are some types of benefits that are not taxable. These include:
- Travel passes
- Bike and safety equipment under the Cycle to Work Scheme
- Certain employee share schemes and profit-sharing schemes
- Canteen facilities
- Some types of accommodation
- Employer contributions to approved pension schemes
- Phones and computer equipment for business use (where private use is incidental)
Small benefit exemption
The small benefit exemption means that you can get some vouchers or other non-cash benefits each year without paying tax on them.
From 1 January 2022, you can get up to 2 benefits each year, up to a total value of €1,000. If more benefits are given in a year, only the first 2 benefits qualify.
The vouchers or benefits can only be used to purchase goods or services. They cannot be exchanged for cash.