This note sets out the Revenue approach to the tax treatment of benefit-in-kind arising on employer-provided vehicles during the period of the COVID-19 restrictions.
Where an employee is in receipt of a vehicle (car or van) provided by his or her employer, one of the following situations may apply during the COVID-19 restriction period;
(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; in this situation, no charge to tax as a 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; in this situation 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, for example communication from employer or photographic evidence of odometer.
(c) Employer Allows Private Use
Where an employee has an employer provided vehicle, 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 maintained, for example business mileage travelled in January, amount of private use, photographic evidence of odometer.
(d) Employee Continues Working
Where an employee continues to undertake business travel as usual in an employer-provided vehicle, the usual BIK rules will apply.