# Salary Foregone - BIK



## asdfg (1 Aug 2007)

In our organisation we are able to purchase shares by salary foregoing. 

The amounts are deducted over a number of months 

We now have to pay BIK on this @ 12%pa on the reducing balance each month.  

Is this correct. 

If so can you point me to a source - e.g revenue site


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## ClubMan (1 Aug 2007)

Is this an _ESPP (Employee Share Purchase Plan) _or a _SAYE (Save As You Earn) _scheme or something? _Revenue _approved or not? What are you being charged tax on - the money saved or on any discount on the share price compared to market value? Are you initially avoiding tax/_PRSI _on the salary foregone and then being charged _BIK_? How exactly is the salary deduction done via payroll (e.g. is your gross on your payslip reduced by the salary foregone)?

For what it's worth my employer initially and mistakenly applied _BIK _tax and _PRSI _deductions via payroll on _ESPP _share price discounts until I pointed out to the that this was incorrect, that only tax applied and that this was dealt with on a self assessed basis by the employee via a [broken link removed]. Not sure if that's relevant in this case?

[broken link removed]e is a good summary of the _BIK _rules in force these days.


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## asdfg (1 Aug 2007)

It is a revenue approved share participation scheme. 

We are taxed on amount of the salary foregoing at 12% p a on the reducing balance at the end of each month 

Lets say the salary foregoing is 1000 and deducted from salary over say 4 months 

250 is deducted per month 

BIK calc as follows
1000 @ 12 % /12 = 10
750 @ 12 % /12 = 7.50
500 @ 12 % /12 = 5.00
250 @ 12 % /12 = 2.50

I can ask for the salary to be deducted in the first month but as the shares are purchased before the salary foregone is deducted I am still liable for BIK in the first month even though the shares were only purchased a week prior to deduction from salary. 

I do not have any problem paying this, but am wordering if this is the correct treatment.


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