Payroll and Benefit in Kind

BIK Calculations Ireland

Company cars, EV relief, small benefits and other taxable perks handled through payroll.

Benefit in Kind is taxable notional pay. When you provide an employee or director with a taxable non-cash benefit, you normally need to calculate its value and deduct PAYE, USC and PRSI through payroll. Forti calculates the benefit, checks exemptions, records it in the correct period and keeps the supporting records connected to payroll.

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2026 key figures
EV combined OMV reduction (2026)
€30,000
EV combined OMV reduction (2027)
€15,000
EV combined OMV reduction (2028)
€2,500
General OMV reduction (Cat A1–D)
€10,000
Van BIK rate
8% of OMV
Small Benefit limit
€1,500 / 5 benefits
Top business-km band
48,001 km+
Category E cars do not receive the €10,000 general reduction
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Vehicles
Cars, EVs and vans
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Small benefits
ERR reported on issue date
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Other benefits
Health insurance, loans, accommodation
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Based in
Sandyford, Dublin 18

This service is for you if

You provide a company car or van for private use
You are buying or leasing an EV and want the 2026 BIK cost modelled first
Your payroll still uses the pre-2026 vehicle category or mileage bands
You give staff vouchers or benefits and need the cumulative limit tracked
You pay medical insurance, provide accommodation or make an employee loan
A director receives benefits through an owner-managed company
You need historical calculations reviewed and the correction route identified
You want BIK built into every payroll cycle rather than left until year-end

How company car BIK is calculated

Three steps — OMV after permitted reductions, CO2 category percentage, annual business kilometres. The business-kilometre record must be reliable and capable of verification.

1
Establish the OMV
Use the Original Market Value — the original Irish price including relevant taxes and duties. It is not the current value, the purchase price or accounting depreciation.
2
Apply CO2 category and mileage rate
Match the manufacturer's CO2 figure to Category A1, A, B, C, D or E, then use the correct rate for the vehicle's annual verified business kilometres.
3
Deduct amounts made good
A qualifying payment made directly by the employee to the employer can reduce the calculated cash equivalent — but only where the payment meets Revenue's conditions.
Ordinary travel between home and the normal workplace is private use. Business-kilometre records must be reliable and capable of verification — estimates without supporting logs can fail a Revenue review.

2026 company car BIK percentage table

The percentage applies to the permitted OMV. Category A1 covers zero-emission cars (0g/km) from 1 January 2026.

Annual business km A1 (0g/km) A (1–59g) B (60–99g) C (100–139g) D (140–179g) E (180g+)
0 – 26,000 15% 22.5% 26.25% 30% 33.75% 37.5%
26,001 – 39,000 12% 18% 21% 24% 27% 30%
39,001 – 48,000 9% 13.5% 15.75% 18% 20.25% 22.5%
48,001 and over 6% 9% 10.5% 12% 13.5% 15%

CO2 categories: A1 = 0g/km (zero-emission). A = 1–59g/km. B = 60–99g/km. C = 100–139g/km. D = 140–179g/km. E = 180g/km and above.

What changed for 2026

New zero-emission Category A1
Fully electric cars with 0g/km moved into Category A1 from 1 January 2026, with rates ranging from 15% down to 6% depending on business kilometres.
Highest mileage band now starts at 48,001 km
The lower limit reduced from 52,001 km and is now a permanent threshold. The correct rate still depends on the vehicle's CO2 category.
Temporary €10,000 OMV reduction continues
For 2026, the reduction applies to cars in Categories A1 to D and to all vans. Category E cars do not receive the general reduction.
EV-specific relief reduced to €20,000
Down from previous levels. Combined with the €10,000 general reduction, the total OMV reduction for a qualifying EV in 2026 is €30,000.

Electric vehicle OMV reductions

The combined reduction decreases significantly after 2026. Modelling the BIK cost now — before purchase or lease — is important for fleet decisions.

YearGeneral OMV reductionEV-specific reductionCombined EV reduction
2026 €10,000 €20,000 €30,000
2027 €5,000 €10,000 €15,000
2028 €2,500 None €2,500
2026 EV example: A fully electric car has an OMV of €55,000 and 23,000 business kilometres. The 2026 combined reduction is €30,000, leaving €25,000. Category A1 at that mileage uses 15%, producing annual notional pay of €3,750 before any qualifying employee contribution.

Company van BIK

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Flat 8% rate
A qualifying van uses 8% of OMV after the applicable reduction. CO2 category and business-mileage bands do not apply to vans.
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Electric vans — €30,000 total reduction in 2026
The €20,000 EV-specific reduction and €10,000 general reduction can both apply to a qualifying electric van in 2026.
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€10,000 reduction for all vans in 2026
The general OMV reduction applies to all vans — petrol, diesel and electric — for the 2026 tax year.
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Check the vehicle definition
A vehicle that does not satisfy Revenue's van criteria is treated as a car for BIK purposes — and the car percentage table applies instead.

Small Benefit Exemption

From 1 January 2025, you can provide up to five qualifying non-cash benefits to each employee in a tax year, with a cumulative value no higher than €1,500.

5️⃣
First five benefits only
A sixth benefit does not qualify, even where the total value remains below €1,500. The count applies per employee, per year.
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Cumulative limit of €1,500
Each benefit must keep the cumulative value of the first five qualifying benefits within €1,500 at the date it is given.
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No cash or cash-convertible voucher
The benefit must be a tangible non-cash item or a voucher that can only be used to purchase goods or services.
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No salary sacrifice
The exemption does not apply where the employee gives up salary or other contractual pay in return for the benefit.
The full value of an over-limit benefit is taxable — not just the excess. A single benefit worth more than €1,500 is fully taxable. Where an additional benefit takes the cumulative total above €1,500, that benefit does not qualify and the full value is processed through payroll.

Enhanced Reporting Requirements

When the Small Benefit Exemption applies, you must report to Revenue through ROS on or before the date the employee receives the benefit.

Other benefits Forti calculates

Each benefit type follows its own Revenue valuation rule. The payroll period, documentation and reporting treatment vary.

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Medical insurance
The gross premium is generally treated as the employee's taxable benefit through payroll. The employee may separately qualify for Medical Insurance Relief on their own tax return.
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Preferential loans
The taxable value is the difference between interest at Revenue's specified rate and the interest actually paid, adjusted for the period and outstanding balance.
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Free or subsidised accommodation
The value normally includes annual market rent and related expenses paid by the employer, less amounts paid by the employee. A narrow exemption can apply where the employee must live on business premises.
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Furniture and other assets
Specific valuation rules apply where the employee has private use of employer-owned furniture, equipment or other assets.

Vehicle and charging exemptions to check

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Qualifying pool car
A genuinely shared vehicle can be exempt where it is not ordinarily used by one employee, private use is incidental and it is not normally kept at the employee's home.
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Workplace EV charging
Employer-provided charging on business premises can be exempt where the facility is available to all employees and directors on equal terms.
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Home EV charging point
A separate exemption can apply where the employer retains ownership, provides a qualifying fully electric vehicle and installs the charger at the employee's main Irish residence.
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Part-year availability
The annual cash equivalent can be apportioned where the vehicle was not available for the full year. Business kilometres are annualised for the rate test in this case.

How Forti handles your BIK

Five stages — from the initial benefit and employee review through to ongoing Budget-change monitoring.

1
Benefit and employee details reviewed
We confirm who received the benefit, when it was available, how it was used and what the employee paid. The initial review is free.
2
Valuation and exemption test
Forti applies the relevant OMV, market-value, loan, insurance or small-benefit rule. Where an exemption may apply — pool car, workplace charging, home charger — the conditions are checked before the benefit is processed.
3
Payroll and ERR treatment
Taxable notional pay is added to the correct payroll period. Qualifying small benefits are reported through ERR on or before the issue date — not at month end.
4
Historical position checked
We identify calculation gaps, missing mileage records or late reporting and explain the appropriate correction route. Revenue decides any final liability, interest or penalty.
5
Ongoing review scheduled
Vehicle mileage, recurring benefits and Budget changes — including the declining EV reductions in 2027 and 2028 — are reviewed before they create a year-end surprise.

What we need from you

Vehicle make, model, registration date, OMV and CO2 emissions
Date the vehicle became available and any periods when it was unavailable
Verified annual business kilometres and employee mileage records
Employee payments towards purchase, private use or running costs
Voucher and small-benefit log by employee and date
Medical insurance premiums, loan balances, interest paid and accommodation records
Payroll reports and previous BIK calculations where a correction is required

BIK and payroll pricing

BIK is normally managed as part of payroll because the taxable value must be included in the correct pay period. A standalone review or historical correction is quoted after assessment.

Always free
BIK review
A high-level check of the benefit, current calculation and records needed before work begins.
Free
Initial review, no obligation
  • Current calculation checked
  • Correct category and rate confirmed
  • Exemption conditions reviewed
  • Records gap identified
Book a review
Includes BIK
Payroll processing
BIK calculated and processed within the correct payroll period, with ERR submissions where applicable.
€30
+ VAT per employee per month
  • BIK included in payroll cycle
  • ERR reported on issue date
  • Mileage and benefit records tracked
  • Year-end review included
  • Revenue submissions via ROS
Get started
Historical BIK correction
For errors, amended returns, missing mileage records or late ERR submissions.
Exact quote
Based on employees, years and benefits
  • Gap and error identification
  • Recalculation for affected periods
  • Amended payroll submissions
  • Revenue correction route explained
Get an exact quote

All fees exclude VAT at 23%. PAYE, USC, PRSI and any Revenue liabilities are separate from Forti's fee.

Common BIK mistakes

Using the purchase price instead of OMV
Company car BIK starts from Original Market Value subject to the permitted reductions — not the invoice price or current book value.
Using pre-2026 EV rates
Zero-emission cars now use Category A1. The EV-specific OMV reduction is €20,000 for 2026 — not the higher figures from earlier years.
Applying the €10,000 reduction to Category E
The general 2026 reduction applies to Categories A1 to D and vans only. Category E cars do not receive it.
Keeping weak mileage records
The correct percentage depends on verified business kilometres. Estimates without supporting logs can fail a Revenue compliance review.
Applying car rules to a van
A qualifying van uses a flat 8% rate and does not use the car CO2 category and mileage table.
Reporting small benefits after the issue date
ERR must be submitted on or before the date the exempt benefit is provided — not with the monthly payroll run.
Choosing which voucher to exempt later
The exemption applies to benefits in the order they are provided. Employers cannot reserve the exemption for a later, higher-value benefit.
Taxing medical insurance on the net premium
The gross policy premium is generally the employee's taxable benefit through payroll — not the net amount after any tax credit.

Related Forti services

Payroll and HR
Managed payroll, PAYE, PRSI, USC, BIK and Revenue submissions.
View payroll services →
Limited company accounting
Connect payroll benefits with the company's bookkeeping and annual tax position.
View company accounting →
Online bookkeeping
Record insurance, vehicles, staff benefits and employee contributions consistently.
View online bookkeeping →
Annual compliance
Coordinate year-end accounts, Corporation Tax and CRO work for the employer company.
View annual compliance →
Payroll guide
Forti's 2026 guide to payroll, benefits and employer reporting obligations.
Read the payroll guide →
Forti pricing
Compare payroll, accounting and one-off support prices.
View all pricing →

Common questions about BIK

What is Benefit in Kind?
BIK is a taxable non-cash benefit provided to an employee or director. Its value is normally added to pay and subjected to PAYE, USC and PRSI through payroll.
How is company car BIK calculated?
Start with the permitted OMV, identify the CO2 category, apply the percentage for annual business kilometres, then deduct any qualifying amount paid directly by the employee to the employer.
What changed for electric cars in 2026?
Zero-emission cars moved into Category A1 with rates from 15% to 6%. A qualifying EV receives a €20,000 EV-specific OMV reduction plus the €10,000 general reduction — €30,000 in total for 2026.
Does the €10,000 reduction apply to every car?
No. It applies in 2026 to cars in Categories A1, A, B, C and D. Category E cars — 180g/km and above — do not receive the general reduction.
What is the highest business-mileage band for 2026?
The highest band begins at 48,001 business kilometres. The lower limit reduced from 52,001 km and is now a permanent threshold.
How is company van BIK calculated?
The standard cash equivalent is 8% of the van's OMV after the applicable reduction, less qualifying employee payments made directly to the employer.
Can an electric van receive the EV reduction?
Yes. A qualifying electric van can receive both the €20,000 EV-specific reduction and the €10,000 general reduction in 2026 — €30,000 in total.
How much can I give under the Small Benefit Exemption?
You can provide up to five qualifying non-cash benefits per employee per year, with a cumulative value no higher than €1,500.
What happens if one voucher is worth €1,600?
The full €1,600 is taxable. The exemption does not apply only to the first €1,500 or only to the €100 excess — the entire benefit goes through payroll.
When must I report a small benefit through ERR?
Where the exemption applies, report the date and value through ROS on or before the date the employee receives it — not with the monthly payroll run.
Is employer-paid health insurance taxable?
Yes. The gross premium is generally treated as a taxable benefit through payroll. The employee may separately qualify for Medical Insurance Relief on their personal tax return.
How is a preferential loan taxed?
The benefit is generally the difference between interest calculated at Revenue's specified rate and the interest the employee actually pays, adjusted for the period and balance.
Can Forti correct historic BIK errors?
Forti can review the calculations and payroll records, identify the adjustment required and explain the amended payroll or Revenue communication needed. Revenue decides any final liability, interest or penalty.

Put the benefit through payroll correctly

A company car, voucher or insurance premium can look simple until the valuation, exemption and reporting dates are applied. Forti connects the calculation to payroll before the error reaches year-end.

Get a free BIK review