BIK on commercial vehicles

[jimmy16v]

Probably making the shift from staff to contract in work and looking into changing the car for a van.
At the moment I have an 07 golf gt tdi 170 which I was thinking about converting to a van and using it as a company vehicle. My question is would it be liable for 5% benefit in kind on the original value?
Any help would be appreciated!

[Ned]

Hi Jimmy,

If it helps, this was posted by an accountant I know of:

You can avoid BIK if the vehicle qualifies as a ‘’pooled vehicle’’. So, what is a ‘’pooled vehicle’’?

1. the vehicle is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
2. any private use of the vehicle by the employees is merely incidental to business use, and
3. it is not normally kept overnight at the home of any of the employees

Where all of the criteria above are met no BIK is due. If any of the criteria are not satisfied, BIK applies. Source

If it seems like it's aimed at excluding individual contractors from BIK you're right, it seems to be part of Revenue's ongoing clampdown on small limited companies.

[vinnymcdonnell]

Only real way of getting out of BIK is if your a limited company with more than 1 employee/Director. Good accountant will steer you right

[shaggy]

Some people were using classics as company cars as the value for BIK reduced with age but the actual value of the car increased if you picked the right one. Now that might be UK only. But as our vehicle age determination is based on chassis number perhaps a resto mod classic might work. Is the original sales price adjusted for inflation? Might be worth looking into, there's a lot of people remaking classics into serious machines.

[br1an]

I'm not sure I agree with some of the advice here.

As far as I am aware, the only exemptions from and reductions in BIK are where:
- The vehicle is commercial with no personal usage
- The vehicle is a pool use vehicle and is stored overnight on the business premises
- The user of the vehicle is away from home and office for over X hours/days per average week (e.g. you travel to the UK 3 days a week)

Also, as I understand it, BIK does not reduce with age, it is based on the original market value of the car. So, if you get a 2 y/o Merc for €25K then the BIK is based on its original €55K market value. Where a classic might work is when the OMV is IR£2500 or something like that.

[Mini-E]

Best thing to do is just claim mileage. For me the benefit far exceeds the cost of a company vehicle plus bik

[Mini-E]

It's supposed to be 5% on vans, although they don't seem to be too bad on enforcing this as opposed to company cars

[jimmy16v]

Cheers for all the replies.
I commute approx 600 miles a week between home and work so it would be of great benefit to me if I could claim the vat on fuel and running costs of a van. Suppose it's just a case of doing a comparison of the savings in running costs vs the BIK payment each year.

I understand it makes sense to do it on a new van as your BIK is 5% but you can claim 8% back on depreciation for 8 years. Me old golf is now 10 y/o so depreciation doesn't come into it.

[crank_case]

From Revenue.ie - https://www.revenue.ie/en/employing-...-from-bik.aspx

Exemptions for private use of company vans
Your employee will not pay tax on the benefit of a company van where:

you provide your employee with the van for work purposes and they are required to bring it home afterwards
your employee is not allowed to use the van other than travelling to and from work
your employee spends at least 80% of their time away from work
the gross van weight is more than 3,500kg.

Not clear whether it's a case of meeting one or all of these conditions though.However - No tax is due if you refund your employee expenses for the running of their own van.

So if you were to convert the car to a van and get expenses, you would not pay BIK, as the employer hasn't provided it to you. If they buy the van or give you money to buy it, you pay BIK

[wizard]

Just need to be careful about claiming mileage expenses if going that route, as to what's considered the normal place of work. Plenty got caught over that in the past, who were contracted to work on just one site and claimed from home to site etc. If driving all over and various sites or customers, no bother.