BIK Value

Employers are required to value the BIK. Best estimates should be used.
For most BIK items, the cost incurred by the employer in providing the BIK is to be taken as the value of the BIK for tax purposes. However, the foregoing general rule does not apply in all cases. There are some exceptions.

Use of employer accommodation

If the employer owns the accommodation, the BIK to be put through payroll is either:

• 8% of the value of the property, or
• The market rent of the property

Preferential loans

Where an employer grants a loan to an employee that is not equivalent to other loans granted to non-employees in the course of the employer’s trade, a preferential loan arises. To the extent that the interest rate on a preferential loan is less than the specified rate, a BIK arises. The current specified rates are:

• Home loan – 4%
• Other loans – 13.5%

Cars

In general, the BIK in respect of an employer provided car is 30% of the original market value. However, the 30% factor can be reduced to take account of business usage as per the table below.

It is also possible to reduce the car BIK in cases where an employee, who would not otherwise qualify for a business travel reduction, has business travel of at least 8,000km per year and spends at least 70% of working time away from base provided that a detailed usage log is  maintained.

Vans

In general, the BIK in respect of a van is 5% of the original market value. However, a van will not be regarded as giving rise to a BIK in situations where the following four conditions are met:

• The use of the van is necessary for the performance of employment duties
• The employee is required, when not using the van for work, to keep it at or in the vicinity of the private residence
• The only private travel is home to work
• The employee spends at least 80% of working time away from base.

Shares

Normally, the market value of shares on the date they are provided to an employee is what should be put through payroll. However, in private company situations, arriving at market value might not always be straightforward. It is recommended that a valuation be on file to support the value put through payroll. In some instances, a restriction might be imposed on an employee’s ability to sell the shares. In this situation, the market value can be abated by up to 60% for tax purposes.

Professional Subscriptions

Prior to 2011, payment of professional subscriptions by an employer did not give rise to a benefit in kind charge provided those subscriptions were relevant to the business of the employer. This exemption was revoked from 1 January 2011 meaning that such subscriptions are now taxable and within the scope of the PAYE system unless certain specific criteria are met. In practice, Revenue will examine any cases where PAYE has not been operated to ensure that the exemption is available.

Minister Richard Bruton signed the much anticipated and debated commencement order on 1st of May 2015 in the form of Statutory Instrument 169 of 2015. This statutory instrument dealing with the commencement of the 2014 Act now brings clarity to how the legislation, due to commence on 1st of June, will actually be implemented.

Everything you need to know: https://www.cro.ie/New-Act-2014/Overview

The Minister for Public Expenditure and Reform recently published a circular containing revised rates of subsistence allowances and standard distance requirements. In summary, the rates have been simplified and increased but the minimum distance between the temporary workplace and the normal place of work or home have also been increased. The increased distance criteria could cause problems for businesses.

Rates

The rates effective from 1 July 2015 are outlined below:

Domestic subsistence rates from 1st July 2015

Day subsistence allowance
From 1 July 2015, a day allowance is not payable for an absence on business that is within 8km of an employee’s normal place of work or home. The current distance criteria is 5km.

Overnight subsistence allowance
From 1 July 2015, an overnight allowance will not generally be payable in respect of an absence on business that is within 100km of an employee’s home or normal place of work. The new rules allow for an overnight allowance in “exceptional circumstances” where the distance is in excess of 50km.

http://www.revenue.ie/en/tax/it/leaflets/it54.html

Where a customer files their Form 11 on or before 31 August 2015, Revenue will calculate the tax, PRSI and Universal Social Charge (USC) liabilities on their behalf. This greatly simplifies the process for customers and will assist them in meeting their obligations to file a self-assessment, and in ensuring they pay the correct amount due by 31 October. Earlier filing of a tax return does not mean that a customer has to pay their liability any earlier; the final payment date remains at 31 October.

If a customer files their Form 11 after 31 August 2015 they must make their own self-assessment and calculate the tax, PRSI and USC due by 31 October 2015.

Revenue is currently sending reminder letters to customers who were sent paper Form 11 returns earlier this year. The letters are intended to assist customers in meeting their obligation to file a self-assessment by reminding them that Revenue will calculate the liabilities due if they file their Form 11 on or before 31 August 2015.

It is important to remember that a late filing surcharge will be added to the tax, PRSI and USC liabilities if a Form 11 return is filed after 31 October 2015. However, if the Form 11 is filed and the liabilities paid using the Revenue Online Service (ROS), an extended filing and payment date of 12 November 2015 applies.

Revenue eBrief No. 76/15