BIK where employer also pays Tax&PRSI on Form 11 ?

Hi,

As per:
(http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/paye-prsi.html#section6)
As under the previous system in force to 31 December 2003, an employer may make an arrangement with Revenue to pay on behalf of their employees the tax and PRSI due in respect of certain taxable benefits provided for the employees.

If my employer does this for me, does anyone know how I account for this on the Form 11? ie my P60 says that I have received a BIK of €100 say, and the employer has paid the Tax and PRSI on the grossed up amount (€188) which is fine if I am a PAYE employee, but if I am required to fill out a Form 11, how do I signal that my employer has already paid the Tax/PRSI on this BIK, if I just fill in my income as per my P60 (which includes the €100 BIK) the Form11 calculation will expect me to pay a further €47 which is not correct.

Anyone know how to handle this correctly?

Thanks,

Usjes

BIK is dealt with through your P60, if your gross pay is €188 higher then you are paying more Tax, PRSI and USC.

If you owe anything based on your P60 then you need to check your tax credits and standard rate cut off.

Joe_90 said:

BIK is dealt with through your P60, if your gross pay is €188 higher then you are paying more Tax, PRSI and USC.

If you owe anything based on your P60 then you need to check your tax credits and standard rate cut off.

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Hi Joe,

I'm afraid you're not answering my question at all (not even a little bit ). My question was very specific, where do I account (on the Form 11) for a BIK on which my employer has paid the PRSI and tax on my behalf ? The Form 11 is dealt with by the income tax division and is entirely separate from the PAYE division. So any info the PAYE division may have (as detailed on the P60) is entirely irrelevant from the point of view of the Form 11 up until the point that I transcribe this info from the P60 into the Form11 and hence the question:
Where, on the Form 11, do I account for a BIK on which the employer has paid the tax/PRSI already ?

Usjes.

Your P60 should already include the grossed-up benefit, not just the benefit that you received so the figures from your P60 should just be entered into the Form 11 as normal

So your gross pay should have increased by €188 with PAYE/PRSI/USC also increased by the relevant amounts, thereby leaving you with no additional liability

The last paragraph on the link you provided states

The grossed up notional pay, tax and PRSI paid must be included in the payroll of the employee in the year the benefit was provided.

So kind of what Joe said!

DB74 said:

Your P60 should already include the grossed-up benefit, not just the benefit that you received so the figures from your P60 should just be entered into the Form 11 as normal

So your gross pay should have increased by €188 with PAYE/PRSI/USC also increased by the relevant amounts, thereby leaving you with no additional liability

The last paragraph on the link you provided states

The grossed up notional pay, tax and PRSI paid must be included in the payroll of the employee in the year the benefit was provided.

So kind of what Joe said!

Click to expand...

Hi DB74,

A better effort but still not correct. You have somewhat selectively (intentionally or not) quoted from that final paragraph. The entire text of that paragraph is:

However, where the employer agrees to provide an employee with regular or major benefits free of tax and PRSI (e.g. where an employer agrees to discharge the employee's PAYE and PRSI liability on a taxable benefit as part of his or her remuneration package), PAYE and PRSI must be determined by reference to the grossed-up value of the taxable benefit having regard to the employee's marginal rate of tax and, where relevant, PRSI rate and Employer arrangements to discharge employees' liabilities to tax and PRSI - paragraph 6 will not apply. The grossed up notional pay, tax and PRSI paid must be included in the payroll of the employee in the year the benefit was provided.

So, in other words, this final paragraph is just warning employers that they cannot take the pi$$ and try to pass off what is effectively regular salary as a special payment. Such regular payments must be treated sallary and included on the payroll at the grossed up value as all normal salary is.

I agree that the simplest way to deal with payments like this would be to just include the grossed up value and the additional tax paid in the payroll, but the very existance of this guidance:
an employer may make an arrangement with Revenue to pay on behalf of their employees the tax and PRSI due in respect of certain taxable benefits provided for the employees.
implies that, for whatever reason, this is not how it is done. And from looking at my own payslip I see that it is not how my employer has done it (ie. they have just increased my pay by the notional value rather than the grossed up value). Hence my problem just transcribing the income and tax values from the P60 into the Form11 will leave me with an extra liability of €47 per €100 which I should not owe.

Usjes

Hmm ... good point

In Sect 212 of the Form 11, the specific wording is

Gross amount of income from Irish employments, offices and non-Proprietary Directorships subject to PAYE (other than income at lines 212(b), 213(a), 214(a), 215 & 216)

So I suppose you could argue that the benefit shouldn't be included in the tax return at all

Also paragraph 5 of the link you provided states

Taxable benefits ... under the arrangements referred to at ... paragraphs 1 - 4 above will not count as income of the employees concerned for either tax or PRSI purposes nor will the employees be entitled to a credit for the tax or contribution record for PRSI paid under such arrangements.

so again this would lead me to think that the income shouldn't be treated as income at all

You could put the exempt income in Sect 415 (Other Exempt Income) of the Form 11 if you wanted to include it in your Form 11.

After that TBH I'm stumped!

DB74 said:

Hmm ... good point

In Sect 212 of the Form 11, the specific wording is

Gross amount of income from Irish employments, offices and non-Proprietary Directorships subject to PAYE (other than income at lines 212(b), 213(a), 214(a), 215 & 216)

So I suppose you could argue that the benefit shouldn't be included in the tax return at all

Also paragraph 5 of the link you provided states

Taxable benefits ... under the arrangements referred to at ... paragraphs 1 - 4 above will not count as income of the employees concerned for either tax or PRSI purposes nor will the employees be entitled to a credit for the tax or contribution record for PRSI paid under such arrangements.

so again this would lead me to think that the income shouldn't be treated as income at all

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Hi DB74,

Thanks, I had missed that, it still feels like a bit of a fudge but i suppose it is a workable solution. It's not ideal in the sense that I will be entering a number on the Form11 which differs from the income listed on the P60 so if I were audited years from now I would have to remember the reason for the discrepancy, this is why I would much rather that they had an explicit box on the form 11 to cater for this case. But maybe, as you suggest, that is what Item 415 is for.

I have emailed the revenue themselves asking the same question, so it will be interesting to see what answer, if any, they come back with.

Thanks again,

Usjes.