BIK on company car ( for Dummies)

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thedaras

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Hi, is there a guide to BIK that is easy to understand ie as opposed to revenue.ie?
Here are the choices ;taxed at highest rate,

Can get company car for 25/30,or up to 50k
Approx cost of 50k car would be 500/550e per month,inc diesel/maintenance/insurance/tax.(would be too expensive to purchase personally,including diesel etc,but would have a choice to purchase at end of 4 years0

Get mileage,( very little millage used though)
But have the extra money.

Buy own car of around 28k,where at least there is some equity left at end of repayments,using the 500/550e per month.
Thanks in advance..

Keep own car and pocket the company car money?
Get company car at lower end of the scale and pocket the difference?
Purchase the present company car( now 4 years old)?
 
Maybe I'm the dummy, but I don't really follow all of that at all... :confused:

Are you looking at your choices as a director of your own company?

Firstly I don't see how a 50k car could cost 500/550 a month, including diesel/maintenance/insurance? (Except maybe by way of an operating lease, but that still seems very cheap?)

But leaving that aside: If it's going to be primarily used for personal mileage then you'll be looking at a BIK on 30% of the OMV of the car each year, so in the case of a €50k company-owned car (doing less than 15,000 business miles per annum), over 4 years there would be BIK paid on €15k of additional income each year, so your net pay would drop by about €7,200 p.a.. You wouldn't be entitled to any mileage in this scenario, because the car isn't yours.

If you were to draw €550 per month as taxed salary in order to finance the purchase and running of a car personally, then you would need €6,600 extra into your hand in the year. So assuming 52% PAYE/PRSI/USC, then this would equate to €13,750 of additional salary. But you would be entitled to claim tax free mileage up to civil service rates on whatever business mileage is done in the car, which would reduce the €6,600 figure accordingly.
 
Hi, No ,not as director of own company.

He has a company car at the moment,original value of 50k,and his diesel,car tax, maintenance and insurance works out after tax deductions ,at 5/550e per mth.

So based on your first example,it works out at about 7.200 P/A.That would be 625 p/m.

My question is ,is it better to have this 7.500 PA over four years,which would be 30k,and buy his own car where he would have some equity left in it?Obviously the type of car would have to different,ie a 30k car as opposed to a 50k car.

Or would it be better to purchase the company car which he has had for the last four years?

Hope thats a bit clearer..
 
Maybe my brain hasn't fully engaged since the weekend, but I'm still a bit confused! If the person isn't a director, then who says they get to have the entire BIK in salary if they don't take the car?

Personal preference will be a major factor i.e. 50k car vs 25k car.

Also, you haven't factored interest into your figures, if he buys over 4 years, 7.5k p.a. in repayments will get him a 25k car rather than a 30k car.

Based on my fuzzy understanding of what you just clarified, the 500/550 p.m. is a largely irrelevant figure, since this is what the person is paying and will most likely continue to pay in ordinary motoring costs...? (it may reduce slightly in respect of a cheaper car.)
 
Ok, well he has a company car at the moment,its just about time to review as to wheter to get a new company car, buy the existing company car, or take the money and buy his own car.Based on a financial view,my question is which is the most financially beneficial to do..

My understanding is ,if they dont take a company car,they get the benefit of it in salary.So if they are now paying 5/550 a month,obviously they will get that in cash instead.

You say they will contuinue to pay the 5/550 in motoring costs,however at the end of the four years,the car will be theirs as opposed to a company car where its handed back at the end of the four year lease.

Is that any clearer?
 
Actually this is what Im looking for,but an Irish version of same..
[broken link removed]

Anyone know if there is something similar available here?
 
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