How is income defined for PIAs. Is BIK included?

R

Rockflake

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Hi,

does anybody have an exact definition of income as applied to a PIA. In particular I'm trying to find out if BIK is included. If you have to drive a car for your work and so have a company car does, or the BIK, affect the calculation of a monthly payment as part of a settlement.

Rockflake
 
I assume that you have read the notes on the ISI web site.

A PIP is obliged to consider BIK. In practice, BIK is not a big issue. For example, a single man without a car is allowed Reasonable Living Expenses ("RLE's") of €938.14 a month. If the needs needs a car, he is allowed an extra €112.34 to cover the costs of the car. If the man is provided with a car by his employer, then the PIP should make an adjustment for how much the man has to contribute towards the running costs of the car.

If the man is provided with a "low interest" mortgage on his home by his employer which attracts BIK, the PIP is unlikely to make any adjustment to his RLE's, as the monthly mortgage payment would provide for the low interest rate.

If the man was provided with free accommodation by his employer, he would not be provided an allowance for rent etc.

The whole purpose of RLEs is to provide a reasonable standard of living to the debtor. The PIP has to be fair to both the debtor and the creditors in deciding the level of RLE's.

Jim Stafford
 
Hi Jim,

thank you for your reply. I understand that if you are provided with a car you would lose the allowance for a car under "reasonable living expenses".

The way in which Revenue treat BIK for cars requires that you add what it calls "notional income" to your pre-tax income based on a percentage of the initial value of the car. This is why I'm trying to clarify how "income" is defined for the purposes of a PIA.

regards,

Rockflake
 
RLEs' really focus on cash income and would, subject to the caveats above, ignore notional income. Obviously, if someone was being assessed with €30,000 BIK on a very expensive car which drove up the individual's tax bill, then the PIP would have to carefully review the position etc

Jim Stafford
 
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