maternity benefit: offered company car of lesser value

B

Brophy.T

Guest
I work in car sales and as part of my employment terms I have a company car on which I pay BIK - The value of the car is about €40k.

I am due to go on maternity leave next week (the company I work for is not supplementing my maternity benefit) and they have offered me another car of lesser value and not the brand I actually sell.

If maternity benefit is calculated on the basis of the previous tax year then should I be entitled to a company car based on the BIK I paid in that tax year?
 
Hi BrophyT and welcome to AAM,

Im moving this question to jobs/careers section which is where questions relating to employee rights/entitlements are to be found.

aj

Brophy.T said:
If maternity benefit is calculated on the basis of the previous tax year then should I be entitled to a company car based on the BIK I paid in that tax year?
Click to expand...

Similar questions have been asked here before. Ill post the links here when I find them.
 
I didn't think you had any entitlement to car while on leave, regardless of what BIK you have paid. I'm pretty sure that your BIK for your car is charged in the current year, not previous year. Even if not, Revenue can always adjust your tax credits accordingly.

I'd be inclined to take the offer of the smaller car sharpish, before you end up with no car!
 
Brophy.T said:
If maternity benefit is calculated on the basis of the previous tax year
Click to expand...
What do you mean by this? MB is based on your PRSI contribution track record and employment status. Note also that if you have the car while on maternity leave then you may still have a BIK tax/PRSI liability even if the company is not paying salary in part or full.
 
BIK on car has nothing per say to do with maternity pay. BIK is treated as an addition to gross pay for PAYE and PRSI purposes. So it increases your Salary which *may* entitle you to more maternity benefit, if you have not already reached the limit.

I would get rid of the car for the following reasons:

1. BIK on the car is calculated on your 'Annual Business Mileage'. As you are not doing Business Mileage, the percentage of the value of the car which you pay could increase dramatically.

These are in Miles. eg.

15K or less = 30%
15k to 20k = 24%
20k to 25k = 18%
25k to 30k = 12%
30k and over = 6%

So if you normally do 30k+ Business miles you are paying 6% of the car's (market value when new) value, but half that for 6 months off work you may be in the 15k to 20k band and have to pay BIK on 24% of the value of the car.

2. I have rarely seen this been implemented, but as your employer is not paying you while on leave, outstanding BIK will build up on the car. This is technically a "Preferential Loan". You have to pay BIK on the difference between the Revenue interest rate of 12% (increased in budget from 11%) and that charged by your employer.

So you have to do your sums, and see if the car is worth it.


Towger
 
Isn't the employer legally obliged to deduct tax/PRSI liabilities on BIKs? How does this work when the woman is on maternity leave and although not receiving any salary payments is still an employee?
 
Yes, BIK still has to be deducted. So the amount of BIK she owes to the company will build up while on leave. This is treated as a loan, and as such is subject to additional BIK.

Add the above only matters if her company follows the law by the letter...!!!


Towger
 
while on maternity benefit thought if not getting a top up then teh only income will be the bik on the car, its likely that the tax credits will cover this, would need more details re make, etc of car. to be exact, but your payroll department should be able to help with that.

I would get them to confirm that you will be able to get your other car back after mat leave if this is important to you.

In relation to your bik being used to calc mat benenfit, its unlikely that this will be relevant as you get mat benefit as 80% of salary to a max of €280 per week so if weekly gross salary if relevant period is more than €350, which i imagine it is, the car is irrelevant.
 
ClubMan said:
What do you mean by this? MB is based on your PRSI contribution track record and employment status. Note also that if you have the car while on maternity leave then you may still have a BIK tax/PRSI liability even if the company is not paying salary in part or full.
Click to expand...


If you are going in maternity leave in 2008, the relevant PRSI contributions are those made in 2006.
 
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