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Thomas McGibney & Company | ||
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Tax Tips & Traps...for Employers, Employees & DirectorsWe are
all aware that the Irish Tax System contains very few tax saving
opportunities for those in PAYE employment and for their employers.
However, there are a number of allowances and reliefs which
employers and employees can use to reduce the tax burden on
employment. These
issues generally apply to both employees and company directors.
Always get specific professional advice on matters of doubt. Pension
Contributions
Subsistence
Allowances Motor
Expenses
Bus
& Train Passes Cycle
to Work Scheme
Childcare Services
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| Overnight Allowances | Day Allowances | ||
|---|---|---|---|
| Normal Rate | 10 hours or more | 5 hours but less than 10 hours | |
|
€107.69 - €108.99 (depending on salary) |
€33.61 | €13.71 | |
The "Normal Rate" applies to absences up to 14 nights. Reduced Rates apply for longer periods.
This
does not cover time spent
| at
an employee’s normal place of work, | |
| on
journeys between home and the normal place of work |
A separate set of rates apply to international travel.
It is necessary to comply with guidelines issued by the Revenue Commissioners in order to avail of this relief. These are set out in the Revenue leaflet IT54 - Employees’ Subsistence Allowances
Employers
may reimburse their staff tax-free for Motor Expenses incurred in
the course of their work.
These
motor expenses must have been incurred “wholly, exclusively and
necessarily” in performing the duties of the employment. They do
not cover the cost of travelling to and from home to work.
This
relief does not extend to travel via company cars or vans.
The
Revenue Commissioners have specified the following maximum scale of
motor expenses to apply with effect from 5 March 2009.
|
Motor
cars effective from 5 March 2009 |
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Official
Motor Travel in a calendar year |
Engine
Capacity: Up to 1,200 cc |
Engine
Capacity: 1,201 cc to 1,500 cc |
Engine
Capacity: 1,501 cc and over |
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Up
to 6,437km |
39.12 cent |
46.25 cent |
59.07 cent |
|
6,438km
and over |
21.22 cent |
23.62 cent |
28.46 cent |
These
may be applied without specific Revenue approval, subject to certain
conditions.
However, it is essential to strictly follow the guidelines of the Revenue Commissioners in this area. This are set out in their Revenue Leaflet IT51 “Employees Motoring Expenses” This leaflet also includes details of the available rates for travel by Motorcycles and Bicycles.
Where an employer provides a free bus or
train pass to an
employee, the employee is exempt from income tax on the benefit.
This only applies to annual or monthly passes for a scheduled and
licensed passenger transport service.
The provision of a bicycle and associated cycling safety equipment by an employer to an employee is exempt from income tax, and no benefit-in-kind applies in such cases. The bicycle and equipment must be used by the employee mainly travelling to/from work. The scheme is also open to company directors.
There is a limit of 1,000 per employee per 5 year period.
More details on the Revenue website.
Where
an employer provides a free or subsidised childcare services to
employees, is exempt from income tax on the benefit, subject to
certain conditions.
The
main condition is that the employee must be responsible for both
financing and managing the childcare service, either on their own or
in conjunction with other employers.
Where
an employee is provided with a car by their employer, they are
charged PAYE/PRSI on the “Benefit-in-Kind”
(BIK) value of the car.
The extent of the relief depends on the total number of kilometres of business travel for the year, and (if the car was first provided in 2009) the CO2 emissions of the car.
Full details of how BIK applies to Cars are available here on the Revenue website.
Where an employee has the private use of a company Van, there is a “Benefit-in-Kind” (BIK) charge on this private use. PAYE/PRSI and Income Levy are charged at 5% of the original market value of the van.
For
example, Joan uses a company van both for personal purposes and for
her employer’s business.
The
original cost of the van is
Her Benefit in Kind on the van is € 15,000 @ 5% = € 750
She is charged PAYE/PRSI and Income Levy on an additional "income" of € 750
Full details of how BIK applies to Vans are available here on the Revenue website.
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