Car expenses and allowance from Employer

Lexus1976

Another sales rep question, If your doing approx 35k to 40km km per year. What type of company car expenses is the norm? I've been told the following is pretty standard.

Milage 40 cent per km and €400 per month car expenses, is that good? All comments appreciated, seriously have'nt a clue on this type of stuff.

Berty

40c per KM is not very good. You have to factor in tyres, servicing, adhoc parts, natural depriciation of value of the vehicle.

Also, commerical tax and commerical insurance.

75c is pretty normal actually.

Lexus1976

40cent per KM plus €400 euro per month for car expenses is this bad?

Heroditas

Lexus1976 wrote: »

40cent per KM plus €400 euro per month for car expenses is this bad?

Is the €400 taxed? If not, then it's very good.
40c per km = 64c per mile.
It all depends on the size of the car. Are you being provided with one by your work or do you provide your own?

I get a flat rate mileage rate - €1.02 per mile for the first 4000 miles and then 48c for every mile thereafter in a calendar year.
I'm not on the road the whole time though.

The reps in work are provided with cars and are taxed BIK on them.
They then get 12c per km for fuel.

ToxicPaddy

Most companies Ive ever worked for usually just followed the civil service rates..

Engine Capacity up to 1200cc
19.52 cent per km

Engine Capacity 1201cc to 1500cc
22.17 cent per km

Engine Capacity 1501cc and over
25.83 cent per km

Linky

So at 40c a km, its seems decent enough compared to these.
However as someone said earlier, it has to be enough to fully cover your cars depreciation, servicing and maintenance.. otherwise it wouldnt be worth it. Adding to this, you need to take into consideration the cost of insurance as its a work vehicle and used as such so standard domestic insurance doesnt cover it.

Tox

Tox

ToxicPaddy

Also if you have a car thats gonna cost you a small fortune to run, might be worth looking to change this for a more standard rep mobile, such as a mondeo, avensis, primera etc..

JHMEG

Toxicpaddy those rates are not right. The link you gave is also out of date.

Current Civil Service rates are here:

http://www.byrnemccall.ie/byrnemccall/Main/Travel-Subsistence-06.htm

ToxicPaddy

my apologies.. linked the wrong one there.. doh!! JHMEG got it right..

EPM

i get 69c a mile for my 1.6. It depends on engine size-the tdi brigade are making a killing on that one. Runs up to about 1.10 a mile with our company above 3 litre engines.

40c a mile and 400 a month isn't bad at all. That should cover maintainance and some more

testicle

Berty wrote: »

40c per KM is not very good. You have to factor in tyres, servicing, adhoc parts, natural depriciation of value of the vehicle.

Also, commerical tax and commerical insurance.

75c is pretty normal actually.

75c is higher than the Civil Service rate, and thus subject to BIK, as far as I can gather.

EPM wrote: »

i get 69c a mile for my 1.6. It depends on engine size-the tdi brigade are making a killing on that one. Runs up to about 1.10 a mile with our company above 3 litre engines.

So is this...

mick.fr

I believe the 75c for engines over 1500cc is the old rate for company directors, up to 6000ish km a year, after that it is less.

testicle

It was about 1.10 -> 1.20 - they now are:

< 1200cc - 39.12c
1201 -> 1500cc - 46.25
> 1501cc - 59.07

All up to 6437km, after which it reverts to:
< 1200cc - 21.22c
1201 -> 1500cc - 23.62
> 1501cc - 28.46

If your employer is paying you more, tax free, they are leaving both you and them open for a large tax liability.

L1011

Civil service rates were cut by 25% during 2009 and most documents online are not yet up to date with those.

They are a lot higher for the first 4,000 miles to help cover the static costs of the car - tax, insurance basically.

unkel

It is unusual for a sales rep doing 35-40k km per year to use their own car. Do you realise, OP, that you will have to pay income tax at your marginal rate over a lot of your variable (per km) and all of your fixed (per month) contribution from your employer?

Heroditas

MYOB wrote: »

Civil service rates were cut by 25% during 2009 and most documents online are not yet up to date with those.

Were they? Feck. We're linked to the civil service rate so no doubt we'll have ours cut too - despite fuel increasing in cost

L1011

Heroditas wrote: »

Were they? Feck. We're linked to the civil service rate so no doubt we'll have ours cut too - despite fuel increasing in cost

I've just noticed the link provided there DOES have the new rates on it! But yes, if you rates haven't changed since last year or so, be prepared for a shock reduction.

Work advised us to hand back the difference to avoid tax liabilities but didn't force anyone to. It amounted to 20 quid for me (I've a company van that gets used most of the time, rarely use my own) so I did, others didn't...

Seth Brundle

Heroditas wrote: »

Is the €400 taxed? If not, then it's very good.

Expenses cannot be taxed IIRC

testicle

Heroditas wrote: »

Were they? Feck. We're linked to the civil service rate so no doubt we'll have ours cut too - despite fuel increasing in cost

They should have been cut already...

kbannon wrote: »

Expenses cannot be taxed IIRC

Sure they can, if they exceed certain limits.

Heroditas

MYOB wrote: »

I've just noticed the link provided there DOES have the new rates on it! But yes, if you rates haven't changed since last year or so, be prepared for a shock reduction.

Just had a look there, the reduction is more substantial for the first 4000km, the reduction on the remainder isn't too bad.
I must ask when these will filter through.
We only get 80% of the civil service rate anyway so we won't have to hand anything back

kbannon - hadn't realised it was paid as an expense. €400 is very generous with mileage thrown in! :eek:

cyclopath2001

kbannon wrote: »

Expenses cannot be taxed IIRC

They can, if in the opinion of the Revenue they're not allowable or are excessive.

The idea of sticking to the CS rates is that it avoids a time-consuming and expensive argument with Revenue.

dudara

We get 43c per km, irrespective of engine size. But you might not drive to a client site for a year, and then you could spend 6 months driving - so there's no predictability.

unkel

cyclopath2001 wrote: »

They can, if in the opinion of the Revenue they're not allowable or are excessive.

The idea of sticking to the CS rates is that it avoids a time-consuming and expensive argument with Revenue.

Spot on. For years a generic rate of (£0.45) €0.60 per mile was acceptable by the Revenue (as being untaxed) regardless of the total annual mileage or engine size, but that obviously benefited high mileage expense claimants.

Another point not made on this thread yet is that driving to and from the office (normal place of work) is private mileage and cannot be expensed. Also if you drive to a customers' site and the distance from your normal place of work to the customers' site is 20 km and the distance from your home to the customers's site is 50 km, you can only claim the difference of 30 km.

unkel

kbannon wrote: »

Expenses cannot be taxed IIRC

Let's all get rid of our salaries and claim expenses only so

dudara

unkel wrote: »

Another point not made on this thread yet is that driving to and from the office (normal place of work) is private mileage and cannot be expensed. Also if you drive to a customers' site and the distance from your normal place of work to the customers' site is 20 km and the distance from your home to the customers's site is 50 km, you can only claim the difference of 30 km.

Good point. 'Lesser of rule' is something my employers quite like. Thankfully I only live 2 miles from the office.

unkel

dudara wrote: »

Good point. 'Lesser of rule' is something my employers quite like. Thankfully I only live 2 miles from the office.

Oops I actually typed the wrong figures. You can only expense the least of the two figures. So only 20 km, and NOT 30 km as I posted

rabbitinlights

kbannon wrote: »

Expenses cannot be taxed IIRC

I'm also in a similar position; 5,000 euros Car allowance (419e a month) and 64c per mile (every mile) and i'll probably be doing 25,000 miles.

From my understanding the allowance is taxable and subject to levy and prsi so will actually be more like 300 euros in my pocket where as the per mile rate is a tax free expense.

When would the revenue step in and start taxing the per mile rate?

S.

NewApproach

If its truly an expense, as in reimbursing the cost to you it is not taxable. If its a payment for using your own car, and the €400 mentioned above sounds like this, it could be taxable if you cant prove its entirity was spent maintaining the car, AFAIK

Heroditas

NewApproach wrote: »

it could be taxable if you cant prove its entirity was spent maintaining the car, AFAIK

Ah but if you're doing large numbers of miles and the car doesn't need to be maintained that much, the money is supposed to cover depreciation, isn't it?

Lex Luthor

There is probably a very good chance that the 400/month is taxed...can't see how else it could be paid without paying tax/prsi & health leavy and all the other levies on it.

If thats the case, then its not great...

I get 27c/km plus €1k/month allowance which is IMO not bad. For me it works out better as I only do about 15,000km/year, but it might be in your interest to get the higher mileage rate and lower allowance if you do more on the clock like you do about 40k

_Kaiser_

Think yourselves lucky.. I get 19c per km (and a subsistence allowance which works out at about €13 if I'm offsite more than 5 hours - public sector) but it barely covers the diesel, never mind tyres, depreciation, increased servicing costs etc - oh and I've done about 50k km since last April

An Ard Ri

The €400 is a fixed allowance and should be taxed. It changed as of the 2004 Finance Act. There is a way to claim back tax on this. If you are taxed, send me a message and i'll show you how to claim it back.

JHMEG

unkel wrote: »

Oops I actually typed the wrong figures. You can only expense the least of the two figures. So only 20 km, and NOT 30 km as I posted

It's very easily solved by driving to the office first, and then claiming mileage from the office to where ever. That's the way I did it when I worked in the public service, but I was fortunate to live quite close to where I worked.

testicle

rabbitinlights wrote: »

I'm also in a similar position; 5,000 euros Car allowance (419e a month) and 64c per mile (every mile) and i'll probably be doing 25,000 miles.

From my understanding the allowance is taxable and subject to levy and prsi so will actually be more like 300 euros in my pocket where as the per mile rate is a tax free expense.

When would the revenue step in and start taxing the per mile rate?

S.

When you go over the Civil Service rate, which you have done. The max, untaxable, is 59.07c per km for engines over 1501cc, and only for the first 6437km. For any mileage over 6437km, the maximum is 28.46c

Actually, scratch that, you're on a per mile rate. The max, untaxable, is 95.05c per mile for engines over 1501cc, and only for the first 4000 miles. For any mileage over 4000 miles, the maximum is 45.79c.

Given you claim under the Civil Service rate for 4000 miles, assuming you drive a car >1501cc, and over it by (64-45.79=) 18.21c for 21,000 miles that's a potential tax liability on a total of €3824.10 ....

I hope your company is never audited!

An Ard Ri

Lex Luthor wrote: »

There is probably a very good chance that the 400/month is taxed...can't see how else it could be paid without paying tax/prsi & health leavy and all the other levies on it.

If thats the case, then its not great...

I get 27c/km plus €1k/month allowance which is IMO not bad. For me it works out better as I only do about 15,000km/year, but it might be in your interest to get the higher mileage rate and lower allowance if you do more on the clock like you do about 40k

Lex,

This is the form i was talking about in the message i sent you today. Any questions. Give me a shout.

rabbitinlights

testicle wrote: »

I hope your company is never audited!

What happens if my company is UK based?

Thanks for explaining that though, makes things much clearer.

Heroditas

rabbitinlights wrote: »

What happens if my company is UK based?

You'll just get audited instead.