I am advised by Revenue that concessional treatment has been agreed in relation to the operation of the benefit-in-kind (BIK) tax charge on employer-provided vehicles during the course of COVID-19 related travel restrictions.
Therefore, where an employer provided vehicle is made available to an employee the following will apply for the time being:
(a) Employer Takes Back Possession of the Vehicle
Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no BIK shall apply for the period.
(b) Employer Prohibits Use
Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle, no BIK shall apply if the vehicle is not used for private use. Records should be maintained to show that the employer has prohibited its use and no such use has occurred, e.g. communication from employer, photographic evidence of odometer etc.
(c) Employer Allows Private Use
Where an employee has a car provided by his/her employer and
- the circumstances in the previous example don’t apply;
- limited or reduced business mileage (if any) is undertaken during the period of the COVID-19 crisis; and
- personal use is limited
the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due. Thus, the percentage applied in the calculation of the cash equivalent, which is based on annualised business mileage, may have regard to the actual business mileage for January 2020, for the period of the COVID-19 restrictions. Appropriate records should be kept, e.g. business mileage travelled in January 2020, amount of private use, photographic evidence of odometer etc.
Employee Continues Working
Where an employee continues to undertake business travel as usual in an employer-provided vehicle, the usual BIK rules will apply. Further information on the taxation of employer-provided vehicles is available on Revenue's website.
Guidance on the above, and many other matters pertaining to COVID-19, can be found on Revenue's website.
Allowing January 2020 to be used as the base month for the calculation of business mileage in scenario (c) above enables the annualised business mileage to be calculated having regard to the actual business mileage that would likely have been undertaken in the absence of any COVID-19 related travel restrictions. This is considered to be both a fair and reasonable approach, however it is acknowledged that this approach may not cater for every individual situation.
Therefore, in situations where an employee did not have any business mileage for their current role in January 2020, for example where an employee has taken on a new role since that time, a reasonable alternative may be used to calculate the annualised business mileage for 2021. The reasonable alternative used should have due regard to the specific role carried out by the employee, and the business travel the employee would likely be expected to undertake in the absence of any COVID-19 related travel restrictions.