BIK On company car

frostydog

Hi,

I'm hoping someone with common sense can shed some light on a very strange request i've had from my company.

I started with the company in Jan 12 - I was asked with mileage i would be doing and not really knowing i estimated i would do 30,000 Kilometers.

This is the first time i've had a company car so i was really in the dark.
My BIK was set a 173 per month and that was fine
As it is a new enough venture in Ireland i didn't quite to the 30,000 K/M but did 28,000. I was again asked how many Kilometers i would do this year and as things have gotten busier I estimated 35 - 40,000 K/M this would bring me in to the 18% bracket.

To my amazement near €1500 was taken out of my pay this month and i got a very matter of fact letter from HR to say it will be like this every month

Is it not absurd to pay nearly €18000 a year BIK on a car worth basically double that (Car is valued €38000)

Any Info or a breakdown on pricing would be very helpful

shuyin1

Doesn't seem right from the information you've provided. The more mileage you do the more the BIK is reduced. (38000x.18=6840 annually). Even with the highest rate for category F/G car, its still only 40%. Value is based on the Original market value and not market value. Check Here for the tables.

frostydog

Thanks for the link.

There seems to be 2 ways of calculating your BIK
1. Original market value and usage
2. Emissions. My car falls into the C range >140G/Km-155g/Km = 30%

Worse case 38000 @ 30% = 11400 (Still crazy I could buy a very decent car for that)
Best case 38000 @ 18% = 6840 (570 per month would get you a very nice car on finance and you would own it afterwards)

My thoughts were the figures from above i.e 11400 or 6840 which ever it maybe was thought to be the actually value of the benefit in kind received and this taken as an addition yo you salary and taxed from here

Example:

Salary 40000
BIK 10000

Total taxable income 50000 @ normal PAYE and PRSI rates

From whats been said above it looks like I would pay the government the price of the car in tax over 2 years, how can that make sense

The company pays for the car through a fleet company over 3 years(i'm not sure of the terms but it must be less then the original market value otherwise why would they do it - after 3 years the fleet company sell it, making their profit)

Employee is paying the tax man the price of the car again over 5 years even at the lower rate of 18% ????

I'm gobsmacked if this is the way the system works

shuyin1

The co2 emissions give you the category you fall into. (cars bought after 09) From there you would look at the business km. (32-40k km- 18%). Its always based on original market value. 38k@18% is what your bik should be if its a category a/b/c car. Talk to whoever is in charge, they might of made an error.

frostydog

I think your right thanks Shuyin1