Ifac reminds Kilkenny farmers about the tax implications of live-in roles

Ifac is reminding Kilkenny farmers of the tax implications of providing free or subsidised accommodation for their farm employees.

Across the country, high rents along with a shortage of rental properties are making it increasingly difficult for employees to find accommodation.

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Benefit-in-Kind
As with any employee benefit, when considering offering free or subsidised accommodation, it is important to understand the benefit-in-kind implications. Under Revenue rules, BIK on employee accommodation is calculated based on the annual market value of the rent plus any related expenses paid by the employer (such as light and heat). While the employee is liable for PAYE, PRSI and USC on the benefit received, access to accommodation is very attractive in the current market and can compensate for lower wages in certain roles.

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BIK exemption
For certain roles, accommodation provided by an employer may be exempt from BIK.
Where an employee is required to live in accommodation on their employer’s premises to perform their duties, the provision of free accommodation may be exempt from BIK. Revenue guidance states that this requirement is usually met where:
The employee is required to be on call outside normal hours; The employee is actually frequently called out; The employer provided the accommodation so that the employee could access work quickly.

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Other non-taxable employer benefits
Tax-free benefits to your employees include: Bicycles and safety equipment; Certain course and exam fees; Employer pension contributions to Revenue approved schemes; Small benefits worth €500 or less that are not in cash form and are given to the employee once a year.

When hiring employees, it is important to agree on wages on a ‘gross’ rather than a ‘net’ basis, to avoid unforeseen costs if the employee’s tax status changes.