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Benefit in Kind?

  • 25-09-2009 1:08pm
    #1
    PhilipDonne
    Closed Accounts Posts: 5 ✭


    BIK Question on Cycle to Work Scheme: -

    Am on a salary at higher rate of tax 41%

    Company has offered to offer employees the bike to work scheme. No mention of limits, but have been advised that "amounts over €1,000 will be subject to income tax and PRSI at your relevant marginal rate i.e. at the top tax rate that you pay."

    Understand that tax / PRSI / levies relief is available up to €1000, savings of 51%
    (41% tax / 8% PRSI / 2% levy)
    Meaning I pay €490 over 12 months.

    >>>>>>>
    Just wondering implications ifI go for a bike in excess of the €1000?

    From what I can find, am I correct in reading it that i will be charged tax / pensions / levies on it?

    so if i get a bike for €1,500
    I will pay €490 / 12 each month for the first €1000

    Then theres the B.I.K. of €500 on which I pay 51% = €255 in taxes/levies
    But its still a saving of €245 for the employee tho, if the company agrees to bikes >€1000

    Or am I reading something wrong?

    Thanks in advance
    Tagged:


Comments

  • #2
    dearg lady
    Closed Accounts Posts: 2,091 ✭✭✭dearg lady


    I think it works the same way as the bus/rail tickets so say you earn 30,000 gross in a year and avail of bike scheme for a 1,000, your gross pay is reduced to 29,000 and this is what you pay tax and PRSI on. Benefit to employer is they're paying PRSI for you on the reduced amount also.

    I'm actually not sure how it works if you go over 1,000, but there is no BIK implication as you are paying the price of the bike yourself, in lieu of wages. However it may be the case that there is no option to purchase a more expensive bike, and just get the benefits on the first 1,000. Maybe ring Revenue to clarify this?


  • #3
    Mr Clonfadda
    Registered Users, Registered Users 2 Posts: 372 ✭✭Mr Clonfadda


    If you are on the top rate of tax you will essentially only pay the 490 for the 1000 euro any excess over that will be deducted from your net salary so would be exactly the same as spending 500 euro on anything.


  • #4
    wandering monk
    Registered Users, Registered Users 2 Posts: 40 ✭wandering monk


    Intersting point to note as well is the Greens were trying to add the electric bikes to this scheme as well. Think it was passed:
    http://www.greenparty.ie/en/news/latest_news/electric_bicycles_added_to_cycle_to_work_scheme


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