BIK on company car

Jane1012

Hi all,

I have been searching google trying to figure this out but I’m non the wiser.
I have the possibility of getting a company car, market value is €27,000 and I do little business miles so I would pay the 30% BIK (I think) can anyone advise how that works tax wise?
I am on the higher tax band.

HcksawJimDuggan

BIK is calculated on the Original Market Value (OMV) of a car which is essentially the price paid for the car when it was first registered. Assuming in your case the OMV is €27,000 and as you incur little mileage, the BIK would be €8,100 (€27,000 x 30%). Assuming you are paid your salary on a monthly basis, you would pay tax of €329.06 per month on this BIK (€8,100/12=€675) (€675x48.75%=€329.06) 48.75% - 40% PAYE + 4% PRSI + 4.75% USC

Bobby1984

BIK on cars is not based on the current market value, it is based on original market value ie when it was first registered.

Assuming the €27K is current value which we ignore and that the OMV was €50K, the notional pay would be €15K (30% of 50K).

Assuming high tax rate of 51% which includes Paye, Prsi & USC, you would pay €7,650 tax per year.

PS there is a lower % BIK for employees with low business kilometres

https://www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-of-company-cars/employees-with-low-business-kilometres.aspx

Bobby1984

HcksawJimDuggan wrote: »

BIK is calculated on the Original Market Value (OMV) of a car which is essentially the price paid for the car when it was first registered. Assuming in your case the OMV is €27,000 and as you incur little mileage, the BIK would be €8,100 (€27,000 x 30%). Assuming you are paid your salary on a monthly basis, you would pay tax of €329.06 per month on this BIK (€8,100/12=€675) (€675x48.75%=€329.06) 48.75% - 40% PAYE + 4% PRSI + 4.75% USC

Cross post, you got you post in while I was typing mine

Jane1012

Thanks both, this helps a lot.

When I say current market value I mean original (I have not selected one yet but was looking in that range)

Many thanks!

Pawwed Rig

This is every year btw while you have the car. You may end up paying more in tax than the car is worth.

FishOnABike

If you do little business miles is an EV worth looking at? Electric vehicles have 0% BIK.

Jane1012

FishOnABike wrote: »

If you do little business miles is an EV worth looking at? Electric vehicles have 0% BIK.

I did think about this but is the 0% BIK on EVs only planned for this year?
I know they could revoke at any time but I keep
Seeing only for 2018

FishOnABike

Jane1012 wrote: »

I did think about this but is the 0% BIK on EVs only planned for this year?
I know they could revoke at any time but I keep
Seeing only for 2018

It seems that the intention to extend it for the next three to five years has been expressed
https://www.irishtimes.com/business/transport-and-tourism/benefit-in-kind-support-for-electric-cars-to-be-extended-1.3273307?mode=amp
It's not written in stone but I'd think it reasonable to expect the incentive to remain while the uptake on EVs is still low.

From what I can see with BIK it would be far better to get a car allowance rather than a company car. The way BIK is calculated is insane, just the usual punish those who get a few perks that's common practice in Ireland.

williewallace

When you pay BIK on a company car, does the company still have the right to put company branding on it?

Pawwed Rig

williewallace wrote: »

When you pay BIK on a company car, does the company still have the right to put company branding on it?

They can put whatever they want on it. It is up to the individual whether they accept the benefit or not.