The company car benefit-in-kind (BIK) is liable to which taxes?

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Prepare for the Qualified Financial Adviser Exam 2 with flashcards and multiple choice questions, complete with hints and explanations. Get exam-ready and increase your confidence with our comprehensive study materials!

Multiple Choice

The company car benefit-in-kind (BIK) is liable to which taxes?

Explanation:
A company car provided as a benefit-in-kind is treated as part of the employee’s earnings. That extra value is added to gross pay and taxed accordingly, so it triggers income tax plus the Universal Social Charge (USC) and Pay Related Social Insurance (PRSI). In this system, the BIK value isn’t taxed in isolation; it increases the overall gross income that is subject to all three taxes. That’s why the correct answer is that the BIK is liable to income tax, PRSI and USC. The other options would imply only one or two taxes apply, which isn’t how BIK is treated.

A company car provided as a benefit-in-kind is treated as part of the employee’s earnings. That extra value is added to gross pay and taxed accordingly, so it triggers income tax plus the Universal Social Charge (USC) and Pay Related Social Insurance (PRSI). In this system, the BIK value isn’t taxed in isolation; it increases the overall gross income that is subject to all three taxes. That’s why the correct answer is that the BIK is liable to income tax, PRSI and USC. The other options would imply only one or two taxes apply, which isn’t how BIK is treated.

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