Taxes Consolidation Act 1997 section 985A

Application of section 985 to certain perquisites etc.

Section 985A requires employers to operate PAYE on benefits in kind, perquisites, and other non-cash emoluments provided to employees.

• Employers must apply PAYE to perquisites chargeable under section 112, including preferential loans, employer-paid health insurance, and the private use of company cars and vans
• The employer must deduct income tax on a notional payment equal to the best estimate of the taxable value of the benefit, even where the employee has insufficient cash remuneration to cover the deduction
• From 1 January 2011, share awards to employees are subject to PAYE, and from 1 January 2024, gains on the exercise of share options are also brought within the PAYE system
• Where the employee does not reimburse the employer for the tax paid by the end of the tax year, the amount borne by the employer is treated as a further taxable benefit in the following year