Benefit in Kind (BIK) system is a way for employers to provide non-cash benefits to their employees. These benefits are taxed as if they were cash, and the appropriate level of PAYE, PRSI, and USC must be deducted from the employee’s pay by the employer. The value of the benefit is determined by the Revenue Commissioners, and it is based on the market value of the benefit.

According to the Revenue Commissioners, BIK is defined as “any benefit which employees receive from their employment or office which is not included in their salary or wages”. This includes things like company cars, private medical insurance, and free or subsidised accommodation. The rules that apply to BIK vary depending on the type of benefit, but in general, the value of the benefit is calculated as the market value of the benefit minus any amount paid by the employee.

One of the most common types of BIK is the company car. The value of the benefit is calculated based on the car’s Open Market Value (OMV), the annual business kilometers driven, and the CO2 emissions-based bands  The number of mileage bands has been reduced from five to four since January 2023 

Another example of BIK is free or subsidised accommodation. The value of the benefit is calculated as the market rent of the property minus any amount paid by the employee 

It’s important to note that not all benefits are subject to BIK. For example, there are certain tax exemptions for small benefits, such as staff parties and small gifts.

In conclusion, the Benefit in Kind system is a way for employers to provide non-cash benefits to their employees. These benefits are taxed as if they were cash, and the value of the benefit is determined by the Revenue Commissioners. The rules that apply to BIK vary depending on the type of benefit, but in general, the value of the benefit is calculated as the market value of the benefit minus any amount paid by the employee. It’s important for employers to understand the rules that apply to BIK and to ensure that they are complying with their obligations under the tax code.