Live in Childminder BIK?

BigFish75

Hi all,

I've searched and can't find an anwser (that I can comprehend) to the following situation.

Myself and my wife both work full time and have a full time live in childminder who is fully registered as an employee. To keep costs down I handle the P30 returns and am now about to do the P35.

I've always had a niggling feeing that I'm not taking advantage of the fact that the Childminder lives in our house rent free and we supply all her meals etc.

What is the correct way to treat this? If I rented out the room she has and provided the level of "all inclusive" meals and bills (ESB, Gas, Broadband, NTL) etc I reckon I'd get €500 a month from someone.

How can I account for the "extra" €6,000 in BIK she receives a year on top of her paid salary?

Fish

seamus

From: http://www.revenue.ie/en/tax/it/leaflets/it20a.pdf (Page 13)

and

http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/subsidised-accom.html#section2

Employee required to live on premises
A taxable benefit will not arise where you, as an employee (but not as a director),
are required by the terms of your employment, to live in accommodation provided
by your employer, in part of your employer’s business premises so that you can
properly perform your duties AND EITHER
- the accommodation is provided in accordance with a practice which, since
before the 30th of July 1948, has commonly prevailed in trades of the class in
question as respects employees of the class in question,
or
- it is necessary, in the particular class of trade, for employees of the class in
question to live on the premises.

So the childminder does not have to pay tax on the provided accomodation or associated expenses, assuming that she's a 24-hour carer. The food provided is not a taxable benefit.

From the employer's perspective, you should be able to declare this €6k as a non-taxable employee benefit and get some form of tax relief on it. I would contact Revenue and ask them to clarify.

BigFish75

Thanks Seamus.

She basically works 8am to 5pm Mon-Fri so is neither 24hr or "required" to live in i.e. if she wanted to move in with friends or whatever it wouldn't bother us provided she arrived at our house by 8am each morning.

Does that change the picture? I'm beginning to think if the arrangement doesn't fit the "required" criteria then she may be liable to pay PAYE on the BIK she's receiving and I'm liable for the relevant portion of employers PRSI.

Fish

seamus

BigFish75 wrote: »

Thanks Seamus.

She basically works 8am to 5pm Mon-Fri so is neither 24hr or "required" to live in i.e. if she wanted to move in with friends or whatever it wouldn't bother us provided she arrived at our house by 8am each morning.

Does that change the picture? I'm beginning to think if the arrangement doesn't fit the "required" criteria then she may be liable to pay PAYE on the BIK she's receiving and I'm liable for the relevant portion of employers PRSI.

Fish

Yeah, that sounds like it changes the picture. From what you can see in those links, you would need to show that the employee is required to be onsite (such as a janitor) or would otherwise be regularly called onsite outside of normal business hours.

If you increase her gross income by €6k to account for this benefit, it will be taxed as BIK and PAYE and PRSI are payable on it.

BigFish75

Thanks for the confirmation Seamus.

Wht's not clear to me is how the value of the BIK is actually estblished. I recall someone telling me that the amount you are allowed to charge for a staff member lodging in your house is tiny (€40 a week or so) regardless of how much similar accomodation would cost on the open market or what level of food and services are included.

Is that just an old wives tale?

Fish

seamus

Sounds like an old wives tale or possibly some old union agreement. I'm not an accountant or anything like that, but according to the revenue link:

The annual value of the use of employer-owned accommodation is the annual rent which the employer might reasonably expect to obtain for the property if the property were rented on an arm's length basis and on the basis that the landlord be responsible for all repairs, insurance etc. and the tenant undertook to pay all the usual tenant's expenses.

BigFish75

Perfect, much apprecaited Seamus.