Benefit in Kind - Company Car

dragonsden

Hi, have a query regarding BIK on a company car and hope someone can help out. Started with a new company back in July '12 and a company car was part of the package. OMV of the car was €28k and the company calculated that I would do approx 30k business kilometers which works out at a tax rate of 24%. In March of this year, I informed the company that I'm doing roughly 4.5k business kilometers per month and have been since I started. My tax band was reduced to 6% and my company reimbursed me the difference between the 24 and 6% rate for Jan and Feb '12 in March. I was informed by my company that I would need to contact Revenue to get a rebate from June to Dec of last year.
I wrote to Revenue and stated my case for a rebate. Revenue informed me that they calculated that I had done 27k business kilometers last year which was the case. However, I have argued the point that they need to look at a pro rata total for last year and assess my mileage at 54K business kilometers.
Are Revenue correct with their assessment or should they take the pro rata figure into account? Thanks

Tow

Unfortunately, Revenue use "Training on time Job" for their staff and their customers facing staff are normally the lowest grades. While they normally give correct advice, over the years I have found you should always double check their answers.


From the Employers Guide to Benefit in Kind:

Company Car not available for full year

Adjustments will be necessary where a car is not available for the full year, e.g. where -
an employee receives a car after the start of the tax year, or
an employee gives up a car before the end of the tax year.

Equally an adjustment will be required where a car is for some other reason not available for private use for part of the tax year, for example, where an employee is working abroad for an extended period. In this case, a car provided to an employee will not be regarded as available for private use for that part of the year in which the employee is outside the State for the purpose of performing the duties of the office or employment, provided the following conditions are met:
The employee travels abroad without the car
The car is not available for use by the employee's family or household during the employee's period of absence outside the State

Where a car is not available for part of a year, the business kilometric thresholds and the percentage cash equivalents used should be calculated by reference to the following fraction of the normal thresholds and percentages (as listed in the Table in section Calculation of "cash equivalent"). The fraction is
(number of days in the tax year car is available for private use) / 365

This fraction may also be expressed as a percentage as follows:
(number of days in the tax year car is available for private use) x 100) / 365


Example 11

An employee has the use of a company car for 220 days of the tax year. The original market value of the car is €28,000. The employee travels 25,950 business kilometres during this period.

In this instance, the Table in section Calculation of "cash equivalent" is revised by applying the following percentage to each of the annual business kilometric thresholds and the cash equivalent percentages.

(220 days x 100) / 365 days = 60.27%

The adjusted table for this employee would therefore be:


Annual Business Kilometric Thresholds

Cash Equivalent ( % of OMV )


14,546 or less 18.08%
14,547 to 19,394 14.46%
19,395 to 24,243 10.84%
24,244 to 29,092 7.23%
29,093 and over 3.61%

The notional pay is calculated as follows -
€28,000 x 7.23% (percentage for 25,950 business kilometres) = €2,024 for the year.

dragonsden

Tow wrote: »

Unfortunately, Revenue use "Training on time Job" for their staff and their customers facing staff are normally the lowest grades. While they normally give correct advice, over the years I have found you should always double check their answers.


From the Employers Guide to Benefit in Kind:

Hi Tow, Many thanks for your help. I was almost sure of my facts but the revenue official had me convinced otherwise. Will pursue this now with your information. Thanks, DD.