BIK on fuel query

M

muchmore

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Hi there
We're having this debate in our office today :)

Let's say that you are self employed (have a ltd company and are the sole employee of it) and are working at the same site each and every day for a few years. As in you are regarded as a "normal PAYE employee" on that site, by Revenue.

Your car is "owned" by the company and you pay the BIK- 30% of market value each year etc etc.

Now- can you pay for the diesel to drive to work etc through your business? So each month your business account will pay for the €400 or so on diesel for going to work?
Is there a BIK on this fuel to be paid too?

This seems strange that Revenue will only want the BIK on the company % vehicle's value nad nothing on the fuel you are paying for?

Any thoughts?
 
muchmore said:
Hi there
We're having this debate in our office today :)

Let's say that you are self employed (have a ltd company and are the sole employee of it) and are working at the same site each and every day for a few years. As in you are regarded as a "normal PAYE employee" on that site, by Revenue.

Your car is "owned" by the company and you pay the BIK- 30% of market value each year etc etc.

Now- can you pay for the diesel to drive to work etc through your business? So each month your business account will pay for the €400 or so on diesel for going to work?
Is there a BIK on this fuel to be paid too?

This seems strange that Revenue will only want the BIK on the company % vehicle's value nad nothing on the fuel you are paying for?

Any thoughts?
Click to expand...

Firstly, if you're paying for the fuel rather than the company then it can't be subject to BIK - I presume you actually mean that it's fuel that the company is paying for.

Anyway if the amount of fuel for private usage is high, this means high private mileage, and logically would imply the business related mileage would be lower (there's only so much time you can spend in the car!), and result in a higher % being treated as notional pay.

If you read here, you can see that the presumption is that the employer normally bears the costs of running the company car and buying the fuel (see Example 1): http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/private-use-cars.html#section6

30% of the COST of a car as notional pay on your payslip every year, taxed at 52% including PRSI & USC could work out fairly scaldy if you're driving a decent company car - i.e. €40k @ 30% is €12k of deemed income, an extra €6,240 in deductions. You'd need the company to be absorbing at least that much in overheads for it to be worthwhile. Although if you're talking about €400 p.m. in diesel, plus servicing, tyres, insurance, and tax all being borne by the company, then you could be ahead.

It would be more worthwhile if you were driving a company Fiat Punto a few hundred miles a week, as the 30% would be a much lower figure.
 
muchmore said:
Hi there
We're having this debate in our office today :)

Let's say that you are self employed (have a ltd company and are the sole employee of it) and are working at the same site each and every day for a few years. As in you are regarded as a "normal PAYE employee" on that site, by Revenue.

Your car is "owned" by the company and you pay the BIK- 30% of market value each year etc etc.

Now- can you pay for the diesel to drive to work etc through your business? So each month your business account will pay for the €400 or so on diesel for going to work?
Is there a BIK on this fuel to be paid too?

This seems strange that Revenue will only want the BIK on the company % vehicle's value nad nothing on the fuel you are paying for?

Any thoughts?
Click to expand...

Firstly you pay BIK on the Original Market Value of the car. The market value of the car has nothing to do with BIK whatsoever. Someone drivng a 10-year old BMW would actually pay MORE BIK than someone driving a brand new same-spec BMW, assuming that the Original Market Value of the BMW has decreased in that 10-year period.

Secondly the 30% BIK rate already assumes that all the expenses related to the vehicle (eg repairs, tax, insurance, fuel) are paid by the company.
 
Thanks Mandlebrot and DB74- you are patron saints of Irish Business queries.

I must give you bonuses next year! :)
 
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