Schedule E – Employment Income Basis of Assessment Tax charged on the earned basis

Schedule E – Employment Income Basis of Assessment Example Salary €50,000 for 2015 Bonus of €10,000 for 2015 paid in Feb 2016 with €4,100 PAYE deducted Income for 2015 is €60,000 (salary plus bonus) when completing income tax computation for 2015 However, the PAYE deducted from the bonus of €4,100 will not be available as a credit in 2015 but in 2016 instead

Schedule E – Employment Income Basis of Assessment In practice, Revenue accepts the bonus being taxed when paid if the individual is not self-assessed

Schedule E – Employment Income Deductible expenses under Schedule E In the performance of the duties of the office and employment Necessarily obliged to incur and defray (travelling expenses) Wholly, exclusively and necessarily (other expenses)

Schedule E – Employment Income Treatment of expenses Reimbursed expenses Flat Rate expenses Round sum expenses

Schedule E – Employment Income Benefits in kind Non-cash benefits Free use of assets Payment of personal expense

Schedule E – Employment Income Exempt benefits A subsidised canteen Monthly bus or train passes Provision of a bicycle under the bike to work scheme

Schedule E – Employment Income Exempt benefits Provision of living accommodation where it is necessary to perform the duties of the employment. It is considered necessary where: The employee is on call outside normal working hours The employee is frequently called out Accommodation is provided for quick access to place of work

Schedule E – Employment Income Taxable Benefits in kind Provision of Motor Car Provision of Accommodation Provision of Preferential Loans Provision of a service or payment of an expense by an employer

Schedule E – Employment Income Provision of a Motor Car Original Market Value (OMV) Basic calculation – 30% of OMV BIK reduced by number of months of the year that the employee has use of the car No reduction in BIK when employee pays for the running costs of the car BIK is reduced when employee reimburses employer for running costs

Schedule E – Employment Income Provision of a Motor Car BIK rate is reduced based on business mileage 0 – 24,000KM 30% 24,001 – 32,000KM 24% 32,001 – 40,000KM 18% 40,001 – 48,000KM 12% 48,001+KM 6%

Schedule E – Employment Income Employer provided accommodation Employer is paying rent on behalf of employee then the BIK charge is the rent Employer owns the house then the BIK is charged on the lower of: 8% of open market value of the property Vouched rental value of the property Any additional costs are also a taxable BIK A contribution from the employee reduces the BIK

Schedule E – Employment Income Preferential loans The BIK charge is calculated on the difference between the specified rate and the rate charged by the employer. Specified Rates Principal Private Residence – 4% Other – 13.5% No BIK arises when an employer whose business includes making of loans gives a loan to an employee at a rate less than the specified rates

Schedule E – Employment Income Payment of expense The BIK charge is the cost of the expense