Revenue is to continue measures that will reduce the Benefit-in-Kind (BIK) tax burden on people who have employer provided vehicles but who cannot use them due to Covid-19 restrictions.

BIK on the use of company cars, vans and other vehicles is partly calculated on the basis of the number of kilometres driven for business over a year, with the monthly bill falling the higher the distanced travelled.  

Last March the tax collector introduced a short-term concessionary measure because the unprecedented situation arising as a result of the pandemic meant many employees were restricted to their homes and were not driving for business purposes at all.

It allowed employees who had use of a company vehicle for personal use to calculate the BIK due each month during 2020 based on the number of kilometres driven last January.

The concession was due to expire at the end of December. 

However, the reintroduction of strict Level 5 restrictions late last month meant many employees were facing the prospect of substantial tax bills of up to 30% of the value of the vehicle for this year, depending on how long the restrictions continue.

But in a statement issued after queries from RTÉ News and Sinn Féin's finance spokesman, Pearse Doherty, Revenue has confirmed that it now intends to reintroduce the policy it put in place last year.

"Having regard to the current public health restrictions, the short-term concessionary measures announced back in March will remain in place," it said.

This means that, for the time being where an employer takes back possession of a vehicle and an employee has no access to the vehicle, no BIK will apply for the period.

If an employee retains possession of a vehicle, but the employer prohibits the use of it, no BIK will apply if it is not used for private use.

However, records will have to be maintained to show that the employer has prohibited its use and no such use has occurred, Revenue said.

In the case where an employee has a car provided by their employer and the circumstances in the previous example don't apply, and limited or reduced business mileage is undertaken because of the pandemic and personal use is limited, then Revenue said the amount of business mileage travelled in January last year can be used as a base month for the purposes of calculating the amount of BIK due. 

"Appropriate records should be kept, for example business mileage travelled in January, amount of private use, photographic evidence of odometer etc," it said.

The development will come as a relief to employees who have the use of a company vehicle out of hours.

"Due to the nature of the Covid-19 pandemic it is not known how long any Covid-19 restrictions will ultimately remain in place," Revenue added.

"Revenue will however continue to regularly review all Covid-19 related matters (including the provisions relating to BIK on employer-provided vehicles) and if any further measures are considered necessary in the future, updated guidance will be made available by Revenue in relation to same as soon as possible."