Company car question

colm_mcm

Maybe this is in the wrong forum, but maybe not.

If I was to get a company car, OMSP of €25k, 15-20k a year being done and 90% of time spent outside the office, how would it affect me financially?

Is there a link between bik and emissions?

EndaHonesty

BIK is based on the new price of the car, not the current value.

OMV - Original Market Price

colm_mcm

That's right, the new omsp would be roughly 25k

EndaHonesty

colm_mcm wrote: »

That's right, the new omsp would be roughly 25k

All info is here;

http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/private-use-cars.html

colm_mcm

Thanks, I found a very handy calculator on the Deloitte website too.
Seems to be preferable to getting expenses

Atlantic Dawn

Would getting a car van be a better option? No BIK on those as far as I know.

colm_mcm

Tbh I'd take the hit to have a car over a van. Good point though.

drunkmonkey

If it's your own business your probably way better off just buying your own car, and if your looking at a car that was expensive brand new and working for someone you probably best off with a car allowance.

A new 25k car wouldn't be bad on bik a used 535d on the other hand would criple you on bik.

Think bik should be based on current car value not its brand new value, grossly unfair the way it is.

EndaHonesty

Atlantic Dawn wrote: »

Would getting a car van be a better option? No BIK on those as far as I know.

5% on a van.

colm_mcm

No it's working for someone else where they supply a car. No details given yet but I'm guessing focus/golf size new or nearly new - and hopefully not a Suzuki Celerio

Drummerboy08

If is motor trade there's a fixed BIK rate.

drunkmonkey

colm_mcm wrote: »

No it's working for someone else where they supply a car. No details given yet but I'm guessing focus/golf size new or nearly new - and hopefully not a Suzuki Celerio

Not sure if it still works, a friend had a company car but had removable magnetic branding on it, so no bik. Friday afternoon they came off and the party started:cool:

Damien360

colm_mcm wrote: »

Maybe this is in the wrong forum, but maybe not.

If I was to get a company car, OMSP of €25k, 15-20k a year being done and 90% of time spent outside the office, how would it affect me financially?

Is there a link between bik and emissions?

You are going to get hit with big BIK.

The lowest rate is 6% for 48k plus km per year. You are going to be on 24% due to low mileage (25k x 24%). That is €500pm BIK. That works out as €250pm (or thereabouts) out of your pocket in cash per month due to the way our tax system works.

Those rates are for cars on lowest emissions band. There is a 1% levy added for each car tax band you increase to account for emissions. €156 band is no levy on top.

Regardless of how much time you spend out of the office, you need to also be doing less than 8k per year to get 20% reduction after a 30% rate is applied. (25k x 30% and then less 20%)

Scheme I am offered is company car or buy my own and I can get the lease amount of €640 per month less tax on that and claim back mileage at a set rate. That way I can avoid the BIK. That could work to my benefit over a few years but I do enough mileage to justify using a company car. Really depends what is offered instead of cash expense in your case. Tease that out before jumping.

colm_mcm

As far I can see the alternative is a mileage allowance, which doesn't seem as attractive as I mightn't even be doing much mileage depending for on where I'm working, plus I don't particularly want to use the civic for work putting more mileage on it. I'd sooner sell it and not pay tax/insurance on it. Which equate to €115 per month.

Damien360

colm_mcm wrote: »

As far I can see the alternative is a mileage allowance, which doesn't seem as attractive as I mightn't even be doing much mileage depending for on where I'm working, plus I don't particularly want to use the civic for work putting more mileage on it. I'd sooner sell it and not pay tax/insurance on it. Which equate to €115 per month.

The mileage rate can be up to civil service rates. Either way, you will have to finance another car, it's tax, it's business class insurance (higher rates and your no claims does not transfer as it is against an existing policy), maintainence and tyres and the fuel. With that in mind, you won't be buying new.

http://www.revenue.ie/en/about/foi/s16/income-tax-capital-gains-tax-corporation-tax/part-05/05-04-02.pdf

Civil service rates

http://www.revenue.ie/en/tax/it/leaflets/it51.html

For 15k per year

6437km x 59.07c and then the remainder at 28.46c per km.

3802+2437=6239 per year to finance car which is about €520 per month.

It's a balancing act for you

drunkmonkey

Damien360 wrote: »

Scheme I am offered is company car or buy my own and I can get the lease amount of €640 per month less tax on that and claim back mileage at a set rate. That way I can avoid the BIK.

Could you explain that in more details, not sure I'm reading you correctly, the company pay you the value of the lease of the car before tax then pay you mileage, so it's your car on a lease plan.
So your in fact getting a car allowance plus mileage or have I that all wrong, reason I ask would like to do something similar with my own car, get company pay the lease/loan/HP and still claim mileage. It's my company so don't want to be screwing it either, but if I could write the car allowance off against the tax bill it might work.

colm_mcm

Drummerboy08 wrote: »

If is motor trade there's a fixed BIK rate.

This job isn't motor trade

Damien360

drunkmonkey wrote: »

Could you explain that in more details, not sure I'm reading you correctly, the company pay you the value of the lease of the car before tax then pay you mileage, so it's your car on a lease plan.
So your in fact getting a car allowance plus mileage or have I that all wrong, reason I ask would like to do something similar with my own car, get company pay the lease/loan/HP and still claim mileage. It's my company so don't want to be screwing it either, but if I could write the car allowance off against the tax bill it might work.

The lease allowance is €640 pm for a company car. Gets me a skoda superb with all maintainence covered and they pay fuel, tax, etc. All I pay is BIK at 6% for 50k per year miles.

If I choose to buy my own instead, I get €640 less the tax at paye rates of 42% as it is paid to salary. They also pay a mileage allowance on top of that but not at civil service rates. I pay for everything on that scheme. The 640 is a company rate ex vat.

Marcusm

drunkmonkey wrote: »

Not sure if it still works, a friend had a company car but had removable magnetic branding on it, so no bik. Friday afternoon they came off and the party started:cool:

That has never "worked" in Ireland except in the case of failure to properly disclose the situation by the employer. Prob not your friend's problem as if the employer failed to properly complete the P.11D, it will be their problem.

Marcusm

Damien360 wrote: »

The lease allowance is €640 pm for a company car. Gets me a skoda superb with all maintainence covered and they pay fuel, tax, etc. All I pay is BIK at 6% for 50k per year miles.

If I choose to buy my own instead, I get €640 less the tax at paye rates of 42% as it is paid to salary. They also pay a mileage allowance on top of that but not at civil service rates. I pay for everything on that scheme. The 640 is a company rate ex vat.

You have a rational employer who looks to the lease cost rather than setting a purchase price limit. Depending on the car lease rates, the BIK could vary significantly between models.

If your business mileage is minimal but your cummute is significant enough a fully expensed €25k company car isn't a bad option.

Even if it cost you €250/€300 (higher rate of PAYE) per month BIK out of your pocket it's going to be cheaper all in than taxing, insuring, paying for & running your own car.

I know you mention you prefer a car to a can but with the 5% BIK of a van the €250/€300 per month BIK out of your pocket falls to €105 ish (higher rate of PAYE), all considered not hugely cheaper.

colm_mcm

Just with a child seat and that. If it was a car I'd get rid of the civic, if it was a van I'd keep it.

Casati

Is it correct the value revenue assume for the car is the recommended retail price less 10%? Does this value include any and all extra on the car- i.e. can you get say a 20k Octavia and stick 10k of extra's on it and pay BIK on an assumed value of 20k less 10% = 18k?

Damien360

Casati wrote: »

Is it correct the value revenue assume for the car is the recommended retail price less 10%? Does this value include any and all extra on the car- i.e. can you get say a 20k Octavia and stick 10k of extra's on it and pay BIK on an assumed value of 20k less 10% = 18k?

No, it is the open market value of the car with all the bells added. From your example, BIK on 30k car.

R.O.R

As an example Colm - using a Golf 1.6Tdi Comfortline 5dr:

Car - €25,970.00
Metallic - €600.82
Tech Pack - €161.00

Total - €26,731.82

A maximum 10% discount can be applied to the OMV before declaring to Revenue, and it's standard to use the full 10% (never been queried), so the figure to declare to Revenue is €24,058.64.

Anything less than 24,000km per annum on Business leaves you in the 30% BIK bracket (and you must declare at least 8,000km of your total annual mileage as personal, unless you can provide proof otherwise), so the calculation is:

€24,058.64 x 30% = €7,217.59 - This is your annual BIK Liability
€7,217.59 / 12 = €601.47 - This is the figure that will show on your monthly payslip, and it's this amount you pay tax on, at your own personal tax circumstances.

Some at the lower rate, some at the higher rate, and PRSI so we reckon the actual cost to you after tax is roughly 50% of the figure on your payslip.


Emissions don't come in to it. The idea was floated for higher rates of BIK for "dirty" vehicles, but that was never signed in to legislation. Only would have affected vehicles over 156g anyway, and they are very few & far between nowadays for company cars.


There is an exception for drivers doing low mileage, but out of the office most of time, that you may qualify for. Would take the BIK % down from 30% to 24% if:
You work an average of not less than 20 hours per week
Travel at least 8,045km per annum on business
Spend at least 70% of your working time out of the office
Retain a logbook detailing buisness km's travelled, business transacted, business time travelled and dates of journeys. Logbook needs to be certified by your employer.

That would take the figure on your payslip down to €481.17. Roughly €65 a month better off, but it does sound like a lot of faffing with a logbook.

HTH

Augeo

Augeo wrote: »

If your business mileage is minimal but your cummute is significant enough a fully expensed €25k company car isn't a bad option.

Even if it cost you €250/€300 (higher rate of PAYE) per month BIK out of your pocket it's going to be cheaper all in than taxing, insuring, paying for & running your own car.

I know you mention you prefer a car to a can but with the 5% BIK of a van the €250/€300 per month BIK out of your pocket falls to €105 ish (higher rate of PAYE), all considered not hugely cheaper.

just to come back to this, I forgot to halve that figure
BIK on a €25k van out of your pocket would be €50ish after tax on the higher rate.

6 times less than on a €25k car

If you'll be keeping your Civic if you got a van it would make sense financially to get the company car and get rid of the van

Unless you fancied a van with 3 front seats, most of which are awful really.