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From Accountingnet.ie Taxation/Budget News
BIK Value Employers are required to value the BIK. Best estimates should be used. For most BIK items, the cost incurred by the employer in providing the BIK is to be taken as the value of the BIK for tax purposes. However, the foregoing general rule does not apply in all cases. There are some exceptions. Use of employer accommodation If the employer owns the accommodation, the BIK to be put through payroll is either:
Where an employer grants a loan to an employee that is not equivalent to other loans granted to non-employees in the course of the employer’s trade, a preferential loan arises. To the extent that the interest rate on a preferential loan is less than the specified rate, a BIK arises. The current specified rates are:
In general, the BIK in respect of an employer provided car is 30% of the original market value. However, the 30% factor can be reduced to take account of business usage as per the table below. It is also possible to reduce the car BIK in cases where an employee, who would not otherwise qualify for a business travel reduction, has business travel of at least 8,000km per year and spends at least 70% of working time away from base provided that a detailed usage log is maintained.
Vans In general, the BIK in respect of a van is 5% of the original market value. However, a van will not be regarded as giving rise to a BIK in situations where the following four conditions are met:
Normally, the market value of shares on the date they are provided to an employee is what should be put through payroll. However, in private company situations, arriving at market value might not always be straightforward. It is recommended that a valuation be on file to support the value put through payroll. In some instances, a restriction might be imposed on an employee’s ability to sell the shares. In this situation, the market value can be abated by up to 60% for tax purposes. Professional Subscriptions Prior to 2011, payment of professional subscriptions by an employer did not give rise to a benefit in kind charge provided those subscriptions were relevant to the business of the employer. This exemption was revoked from 1 January 2011 meaning that such subscriptions are now taxable and within the scope of the PAYE system unless certain specific criteria are met. In practice, Revenue will examine any cases where PAYE has not been operated to ensure that the exemption is available. http://www.kpmg.com/IE/en/IssuesAndInsights/ArticlesPublications/Pages/BIK_PAYE.aspx Billy Burke Head of Employment Tax Services T: + 353 1 410 2759 E: billy.burke@kpmg.ie Gearoidín Burke Director T: + 353 1 410 1497 E: gearoidin.burke@kpmg.ie Gemma Jacobsen Director T: + 353 1 410 1768 E: gemma.jacobsen@kpmg.ie Claire Davey Associate Director T: + 353 1 700 4339 E: claire.davey@kpmg.ie Thalia O’Toole Associate Director T: + 353 1 410 2745 E: thalia.otoole@kpmg.ie © Copyright 2005 by Accountingnet.ie |
