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06 Oct, 2022

Ifac are reminding farmers about the tax implications of live-in roles

In the first quarter of 2022, the national average monthly rents in Ireland were more than €1,500. Across the country, high rents along with a shortage of rental properties are making it increasingly difficult for employees to find accommodation.

Concerning live-in roles, Declan McEvoy, Head of Tax at ifacsaid:“High rents and a housing shortage mean that farmers who can provide free or subsidised accommodation enjoy an advantage in the current market when it comes to attracting and retaining agricultural employees.”

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.

It is also important to be aware that for certain roles, accommodation provided by an employer may be exempt from BIK.

BIK exemption

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.

Other non-taxable employer benefits

You can provide various other tax-free benefits to your employees. These 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.

Remember, 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. 

Retaining good workers

Good employees are difficult to find and expensive to replace so it is worth taking steps to ensure that you provide a good work environment. With the cost of living soaring and rental properties in short supply, free or subsidised accommodation is an attractive and valuable benefit.

To find out more about how your business could benefit contact your local ifac office here.