BIK assistance!

amorgan

Howaye. Looking for a little guidance with BIK calculations. I've tried online calculations but they all seem to assume 52% tax bracket, which I'm under.

I'm just looking to know what BIK will be deducted from my salary for two different options I've been offered.

Golf commercial hatchback van €21000 cost, I think this is at the 5% commercial rate? It's definitely eligible for it.

Focus Titanium hatchback €27000 cost approx. This would be regular BIK.

I do about 20000km a year but am based solely on the road, so think I'm automatically in the 24% of OMV bracket of 24k-36k mileage. Salary with bonuses is under €34k.

namenotavailablE

Try entering the values in my spreadsheet (Excel for Windows, need to Enable macros to run it).

Link to calculator: http://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm

See following image for idea of what to do with main salary incl estimated total bonus in the 'Gross salary' cell and BIK value.



Once you enter the BIK value (i.e. not the vehicle value but your estimate of annual BIK value for use of car and van), click the 'Benefit-In-Kind options' icon (it should flash) and you'll see a 'Show BIK cost' option. Clicking it will display a panel with details of the extra tax/ PRSI/ USC you'll pay for your BIK.

Homer

Rather than start a new thread I thought I would ask here as it’s relevant..

I have a ltd company and am an employee of my company. Would like to purchase a vehicle (crew cab style) and my accountant tells me that it doesn’t meet revenues guidelines on what is a van and the 5% BIK is not applicable.

I have read online and been told by others that if the vehicle is registered in the company name and is used for commercial purposes only (don’t have kids etc) that it is possible to qualify for the 5% rate?

Or else I keep doing my expenses/mileage etc and purchase the vehicle privately. Would be insured and taxed as a commercial regardless.

barneystinson

Homer wrote: »

Rather than start a new thread I thought I would ask here as it’s relevant..

I have a ltd company and am an employee of my company. Would like to purchase a vehicle (crew cab style) and my accountant tells me that it doesn’t meet revenues guidelines on what is a van and the 5% BIK is not applicable.

I have read online and been told by others that if the vehicle is registered in the company name and is used for commercial purposes only (don’t have kids etc) that it is possible to qualify for the 5% rate?

Or else I keep doing my expenses/mileage etc and purchase the vehicle privately. Would be insured and taxed as a commercial regardless.

Your accountant is correct. How a vehicle is (motor) taxed and insured is of no relevance to its treatment for BIK purposes.

Here’s the legal definition of a van for BIK purposes from Section 121A of the TCA 1997:
“‘van’ means a mechanically propelled road vehicle which—
(a) is designed or constructed solely or mainly for the carriage of goods or other burden,
(b) has a roofed area or areas to the rear of the driver’s seat,
(c) has no side windows or seating fitted in that roofed area or areas, and
(d) has a gross vehicle weight not exceeding 3,500 kilograms”

A crew cab is goosed by (c) above - no way around it, without permanently removing the rear seating & windows.

The good news is, based on your post above you don’t need to buy a crew cab so you can just have the company buy a non crew cab commercial and pay the 5% BIK.

Out of interest, where online have you read what you said above about this?

Homer

I appreciate the article is from end of 2017 but towards the end of the article it mentions registering a crew cab as a commercial and the BIK rules? I’m keen to not be looking over my shoulder and worrying about paying back tax in future if revenue come knocking but had heard conflicting reports. As I said it’s an option for me to buy privately and just keep doing mileage/expenses if it’s not an option to purchase the vehicle through the company. Appreciate the response thanks.

Link https://www.google.com/amp/s/amp.independent.ie/life/motoring/car-news/business-and-pleasure-can-your-van-do-double-duty-as-a-family-car-36340692.html

barneystinson

Homer wrote: »

I appreciate the article is from end of 2017 but towards the end of the article it mentions registering a crew cab as a commercial and the BIK rules? I’m keen to not be looking over my shoulder and worrying about paying back tax in future if revenue come knocking but had heard conflicting reports. As I said it’s an option for me to buy privately and just keep doing mileage/expenses if it’s not an option to purchase the vehicle through the company. Appreciate the response thanks.

Link https://www.google.com/amp/s/amp.independent.ie/life/motoring/car-news/business-and-pleasure-can-your-van-do-double-duty-as-a-family-car-36340692.html

Yikes, that guy got the wrong end of the stick from somewhere. I can tell you for sure and from first hand experience, Revenue tax crew cabs as cars, and they don’t give a fiddlers how the vehicle is taxed & insured.

If you make the crewcab a "pool car" then it is not subject to BIK either. Plenty of "pool" cars being driven as business owners main cars from my experience.

relax carry on

Dario Faithful Octopi wrote: »

If you make the crewcab a "pool car" then it is not subject to BIK either. Plenty of "pool" cars being driven as business owners main cars from my experience.

So long as the meet the criteria for pool car and the records are there to support that then that will be fine in an audit situation. It's when there's little to no records to back up its usage as a pool car that problems will arise. And if it's treated as a normal car for BIK and no records exist then the annual millage minus 8000 km is used to determine the BIK band it falls into. So you may end up in a situation of having to pay more tax, interest and penalties than if you'd just operated BIK correctly in the first place. Also with PMOD the absence of or too low BIK being returned will be easier to spot when cross checked against the vehicles held by a company.

Homer

Appreciate all the replies. Pool car won’t wash for sure. It’s decided so! I’ll stick to mileage/expenses and purchase whatever vehicle I want privately. Just couldn’t stomach paying the higher rate of BIK.
There must be some amount of chancers out there running 5 seat commercials and crew cabs and paying the 5%!

Dario Faithful Octopi

Dario Faithful Octopi wrote: »

If you make the crewcab a "pool car" then it is not subject to BIK either. Plenty of "pool" cars being driven as business owners main cars from my experience.

So easy to be caught out on that and let's face it your experience is extremely limited.

Augeo

Augeo wrote: »

So easy to be caught out on that and let's face it your experience is extremely limited.

Well I know 3 or 4 people driving pool cars as their main car for many years (some business owners others employees with a company car but down as pool car) driving it home every night etc so it’s not that limited.

Not saying the op should or advocating it just saying it goes on a lot more than some appear to think.

barneystinson

Dario Faithful Octopi wrote: »

Well I know 3 or 4 people driving pool cars as their main car for many years (some business owners others employees with a company car but down as pool car) driving it home every night etc so it’s not that limited.

Not saying the op should or advocating it just saying it goes on a lot more than some appear to think.

As with a lot of tax evasion, it depends on a person’s appetite for (and perception of) the risk involved.

As a previous poster has pointed out, with PMOD that risk has increased exponentially and with Revenue’s increased focus on payroll taxes, there’s also an increased chance of people getting caught out on back years too.

In relation to your anecdotal experience, have any of these people had Revenue audits where their pool car use was examined and accepted, or are you just saying you’re aware of some people who have been successfully evading tax by not having been caught YET..?

3 or 4....some employees.... Yeah.....you don't even know your own facts 100%

Augeo

Augeo wrote: »

3 or 4....some employees.... Yeah.....you don't even know your own facts 100%

I was being vague on purpose, I know the exact numbers myself obviously.

barneystinson

Dario Faithful Octopi wrote: »

I was being vague on purpose, I know the exact numbers myself obviously.

Well if you really want to be a good friend to your tax evading friends you might want to tell them that thin ice they’re on is melting out from under them...

Calahonda52

Dario Faithful Octopi wrote: »

I was being vague on purpose, I know the exact numbers myself obviously.

Your pals are stealing from you so the proper thing to do is report them: any other course of action lacks personal character and integrity.
Its time you manned up to your social responsibilities

Stratvs

How about a worked example. Crew cab which doesn’t meet criteria for a van. OMV of say €35k. BiK wrongly applied as a van @5%; = €1,750pa. BiK as car potentially due at up to 30% OMV (max where business mileage is 24kmpa or less) = €10,500. Diff €8,750. Say marginal rate 52% for tax/PRSI/usc = €4,550pa which exchequer is losing.

Calahonda52

Calahonda52 wrote: »

Your pals are stealing from you so the proper thing to do is report them: any other course of action lacks personal character and integrity.
Its time you manned up to your social responsibilities

Ha ha not a chance would I report anyone, I say fair play to them and anyone who saves themselves a few bob. The amount I’ve saved by paying cash in hand for rent or to trades peoples etc and other things here and there over the years is significant so I’m quids in on black market stuff rather than people “stealing :rolleyes:” from me.

I don’t know anyone in real life with this sort of attitude, everyone I know would say fair play to someone finding ways to pay less tax.

CIARAN_BOYLE

Dario Faithful Octopi wrote: »

Ha ha not a chance would I report anyone, I say fair play to them and anyone who saves themselves a few bob. The amount I’ve saved by paying cash in hand for rent or to trades peoples etc and other things here and there over the years is significant so I’m quids in on black market stuff rather than people “stealing :rolleyes:” from me.

I don’t know anyone in real life with this sort of attitude, everyone I know would say fair play to someone finding ways to pay less tax.

They are paying less tax til the day their company gets unlucky and called for audit.

Calling something a pool car when it's not is something picked up very very easily at audit time.

Backtaxes, Interest and penalties can close businesses and break people financially.