B
Bryony
Guest
Ok - it's a bit tax nerdy, but I'm actually curious about this:
I’m thinking about getting a bike under this scheme (although probably not for a couple of months), but there is one aspect of it that is confusing me.
The way my employer works it here is that the employer pays the purchase price upfront and the employee returns that to the employer through salary sacrifice over 12 months. The limit for the tax exemption is €1000, but the employer may incur expenditure greater than €1000 per employee.
I'm assuming they don't have a policy of restricting the amount you can spend (I don't see why they would if they get all the money back anyway and actually get a bit of relief themselves on employers' PRSI - is that right..? dunno, anyway...)
Since any amount spent above €1000 is subject to tax as BIK according to Revenue, what is the nature of the BIK on this balance amount? Since the money is repaid to the employer from the employee's pay there is no benefit given in one sense. So I could only imagine that the BIK would be on this balance amount as a no interest loan.
So, if you spent €1200, €1000 would be deducted before tax is applied, and €200 would be an interest free loan. The BIK would actually be €25 (loan x 12.5%), so this would add maybe €10 to the tax bill (marginal rate assumed).
Am I right about this, or way off?
Maybe this doesn’t arise much, but I was thinking of getting a folding bike that I could put on the Luas, and the price can range up quite high for a decent one.
Thanks in advance for any comments.
I’m thinking about getting a bike under this scheme (although probably not for a couple of months), but there is one aspect of it that is confusing me.
The way my employer works it here is that the employer pays the purchase price upfront and the employee returns that to the employer through salary sacrifice over 12 months. The limit for the tax exemption is €1000, but the employer may incur expenditure greater than €1000 per employee.
I'm assuming they don't have a policy of restricting the amount you can spend (I don't see why they would if they get all the money back anyway and actually get a bit of relief themselves on employers' PRSI - is that right..? dunno, anyway...)
Since any amount spent above €1000 is subject to tax as BIK according to Revenue, what is the nature of the BIK on this balance amount? Since the money is repaid to the employer from the employee's pay there is no benefit given in one sense. So I could only imagine that the BIK would be on this balance amount as a no interest loan.
So, if you spent €1200, €1000 would be deducted before tax is applied, and €200 would be an interest free loan. The BIK would actually be €25 (loan x 12.5%), so this would add maybe €10 to the tax bill (marginal rate assumed).
Am I right about this, or way off?
Maybe this doesn’t arise much, but I was thinking of getting a folding bike that I could put on the Luas, and the price can range up quite high for a decent one.
Thanks in advance for any comments.