Bik company car.

T

TrotterDel

Registered User
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67
Hi all Question: If my employer deducts €5k from my gross salary as a transport contribution towards the cost of my company car and shows this on my payslip can I reduce my BIK by €5k?
 
From the top of my head yes you can. But only for the current year, unless you get special permission from Revenue. ie the 5K exceeds the BIK for the year and you want spread it over a number of years.
 
I do'nt think it is allowable. I think the Reveunue would treat the 5k deducted by the Employer as 'salary sacrifice' and actually end up taxing you on this 5k even though you never got it!

Also, I cannot see how he can show it on a pay slip, and in view of my above comment it would not be wise to do so. Your employer is really reducing your salary by 5k. Will he let you keep the 5k if you give up the car...it may be worth your while doing the sums on this.
 
From Employers Guide to BIK
Example 8An employer is willing to provide a company car up to the value of €25,000. The employee has a particular car in mind costing €29,000. The employee agrees to pay the difference of €4,000 to the employer and is supplied with the car valued at €29,000.
The employee travels 19,000 business kilometres annually and contributes €1,000 per annum directly to the employer for the private use of the car.
Year 1
The notional pay is calculated as follows:
€29,000 x 30% = €8,700
Less
Lump sum payment to employer €4,000
Annual amount made good €1,000
Notional Pay in year 1 €3,700
Year 2 and following years
The position is:
€29,000 x 30% = €8,700
Less
Annual amount made good €1,000
Notional Pay in year 2 €7,700

Where, exceptionally, the lump sum cannot be fully set off in computing the notional pay of the first tax year the benefit is chargeable, the balance of the lump sum may be set off in computing the notional pay in respect of the car for the subsequent tax year.
Click to expand...
 
Hi Towager. I am not too sure if you are agreeing or disagreeing with me.
The 4,000 cited in your example is from income that has already been taxed, likewise the annual 1,000.
OP is saying 5k is taken from his gross, before any tax calculations..surely this is not allowable against BIK. Otherwise, we would all (at least in the good times) have got our employer to increase our salary by 5k, then deduct 5k and put it against our BIK !
 
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