Buying a newer van?

WallyWonka

Hi,

I run a limited company. It's just me and my wife. We need to upgrade the van to something a bit newer and less troublesome.

Currently I own the van myself and I get reimbursed by mileage. The problem is, even though the van is needed it doesn't do a whole lot of mileage. I can't be without it but the business is not paying the full weight of what the van is costing me to run. I have a regular car for my personal use so the van is mostly for business use. But some private use too!

I have been looking in to having the business buy a new(er) van but that doesn't seem to make financial sense either. I would be getting a second hand model and both my wife and I would technically have to pay BIK on it.

The other problem is I can't afford an upgrade myself. The business however have the money needed.

Is there some way the business can give me an allowance of sorts to buy or run vehicle considering I don't do a whole lot of mileage? A way which won't attract PAYE, PRSI & USC that is.

Avatar MIA

WallyWonka wrote: »

Hi,

I run a limited company. It's just me and my wife. We need to upgrade the van to something a bit newer and less troublesome.

Currently I own the van myself and I get reimbursed by mileage. The problem is, even though the van is needed it doesn't do a whole lot of mileage. I can't be without it but the business is not paying the full weight of what the van is costing me to run. I have a regular car for my personal use so the van is mostly for business use. But some private use too!

I have been looking in to having the business buy a new(er) van but that doesn't seem to make financial sense either. I would be getting a second hand model and both my wife and I would technically have to pay BIK on it.

The other problem is I can't afford an upgrade myself. The business however have the money needed.

Is there some way the business can give me an allowance of sorts to buy or run vehicle considering I don't do a whole lot of mileage? A way which won't attract PAYE, PRSI & USC that is.

Do you work from home or a premises? How much is the business looking to pay for the newish van.

The BIK for private van use is 5% OMV, that would only be a few hundred euro per year actual tax.

WallyWonka

I work about 30% from home and 70% at customer location. With the contracts the customer location in this case is my 'normal place of business'
The cost of the van is going to be roughly €20,000 but that is the second hand price. New it is closer to €40,000. Yea, specialist equipment and all of that.
From my understanding the 5% apply to the new value of the vehicle so that's €2,000 pa BIK. And potentially by 2? Rather significant.

Avatar MIA

WallyWonka wrote: »

I work about 30% from home and 70% at customer location. With the contracts the customer location in this case is my 'normal place of business'
The cost of the van is going to be roughly €20,000 but that is the second hand price. New it is closer to €40,000. Yea, specialist equipment and all of that.
From my understanding the 5% apply to the new value of the vehicle so that's €2,000 pa BIK. And potentially by 2? Rather significant.

Will you be keeping both vans, why by 2?

It looks like your home is your place of work and you travel to your clients by Van. Why would you need to use the van for private use? If you are making use of the van for private use then there will be BIK.

If you DO make private use of the Van you'll pay your marginal rate of tax plus PRSI and USC, worst case scenario around €1k in tax, but could be around half of that depending if you pay IT tax at the lower rate. This will be the cost to you of using the VAN for private use instead of the car.

WallyWonka

So I won't be keeping both vans. The x2 is to do with my wife, in case she will be hit by BIK as well?

I have several service contracts. Some are based at clients' locations. My understanding is that that is my 'normal place of business' then. I go to them every day I work for them and carry out my work there, at their location. I have 2 main contracts like that. So I can't claim mileage from home to these clients' offices.

I also have another couple of small contracts where I carry out 99.9% of the work from home.

The nature of the beast is I will be using the van a bit privately as well. It's a handy job. I know I could probably argue that it's never used privately but I prefer to be all above board.

I pay income tax at the higher rate.

Avatar MIA

WallyWonka wrote: »

So I won't be keeping both vans. The x2 is to do with my wife, in case she will be hit by BIK as well?

I have several service contracts. Some are based at clients' locations. My understanding is that that is my 'normal place of business' then. I go to them every day I work for them and carry out my work there, at their location. I have 2 main contracts like that. So I can't claim mileage from home to these clients' offices.

I also have another couple of small contracts where I carry out 99.9% of the work from home.

The nature of the beast is I will be using the van a bit privately as well. It's a handy job. I know I could probably argue that it's never used privately but I prefer to be all above board.

I pay income tax at the higher rate.

My understanding is that your place of work is your base (also your home) and travelling to your clients would NOT be disallowed for mileage purposes. If you were deemed an employee of the businesses you regularly attend then you would not be able to claim mileage, but your set up (which seems right considering what I know) is that you provide a contract for service and those locations are not your place of work.

I'm an accountant, but don't work in practice, so hopefully someone else will jump in and confirm.

Is your wife also an employee of the company? BIK is only payable by employees.

WallyWonka

Hmms. This is interesting.
My wife and I are both employees of the business. Although she wouldn't normally drive the van she still does from time to time.

The tricky thing is the definition of 'normal place of work'. In a way I have several normal places of work. Almost every day I would carry out work for more than one client. Every day I would do work at home and also at clients' premises. Not silly work like checking emails but actually tracked, billable work.

If this mileage is claimable it would be great! Then it would really help me solve the above problem as I would be able to claim for the true cost of the vehicle.

Avatar MIA

WallyWonka wrote: »

Hmms. This is interesting.
My wife and I are both employees of the business. Although she wouldn't normally drive the van she still does from time to time.

The tricky thing is the definition of 'normal place of work'. In a way I have several normal places of work. Almost every day I would carry out work for more than one client. Every day I would do work at home and also at clients' premises. Not silly work like checking emails but actually tracked, billable work.

If this mileage is claimable it would be great! Then it would really help me solve the above problem as I would be able to claim for the true cost of the vehicle.

I'm 99.99999999% certain you can claim the mileage (and for previous years if you kept proper records).

You may want to confirm with Revenue that the 5% X 1 covers you and your wife. It would be very harsh to pay an extra €1k for the private usage for minimal extra usage by your spouse.

I doubt many would even entertain it, but as you say it's best to be fully

WallyWonka

This www. fenero.ie/our-blog/where-is-my-normal-place-of-work-for-tax-purposes would suggest I can not charge the mileage.

Avatar MIA

WallyWonka wrote: »

This www. fenero.ie/our-blog/where-is-my-normal-place-of-work-for-tax-purposes would suggest I can not charge the mileage.

Hi,

You're quite right not to take advice from a random stranger on the internet (i.e. me). You should get it confirmed.

However, and I don't want to labour the point, but your place of work is NOT your client's premises.

WallyWonka

I saw your last reply and I have kept googling and trying to read up on this. From my understanding Revenue did a bit of a crackdown on this in ~2014 and with the new guidelines you're essentially not able to call your home your normal place of work.
I would absolutely love it if I could. My own accountant says I can't. My own understanding says I can't.

Random stranger on the internet, you pose a very appealing proposition. But can you point me into the direction of further reading so I can defend my position in case Revenue comes knocking on my door?

Avatar MIA

WallyWonka wrote: »

I saw your last reply and I have kept googling and trying to read up on this. From my understanding Revenue did a bit of a crackdown on this in ~2014 and with the new guidelines you're essentially not able to call your home your normal place of work.
I would absolutely love it if I could. My own accountant says I can't. My own understanding says I can't.

Random stranger on the internet, you pose a very appealing proposition. But can you point me into the direction of further reading so I can defend my position in case Revenue comes knocking on my door?

Can you post/link to the advice that it's not now allowed (bearing in mind traveling to work from home was NEVER allowed)

To my mind treating attending where you work as your work place makes you out to be an employee.

But, maybe I'm missing something.

WallyWonka

Did you follow this link? I think it covers it in pretty good detail, for me as a layman anyway
www. fenero.ie/our-blog/where-is-my-normal-place-of-work-for-tax-purposes

Sorry, I can't hyperlink, I don't have enough 'creds' to do so yet.

But essentially, the work I do for a client not at *their* premises is allowed. To get me to and from the client is not allowed.

Avatar MIA

WallyWonka wrote: »

Did you follow this link? I think it covers it in pretty good detail, for me as a layman anyway
www. fenero.ie/our-blog/where-is-my-normal-place-of-work-for-tax-purposes

Sorry, I can't hyperlink, I don't have enough 'creds' to do so yet.

But essentially, the work I do for a client not at *their* premises is allowed. To get me to and from the client is not allowed.

That link (from what I read) states that you cannot claim mileage from your home to work. That was always the case.

You've said you work from "home" on occasion. Say, you built an office 6 feet from your home and had a desk, PC and filing cabinets and a work bench. Do you think it would be allowed mileage to go from there to your client's work place to carry out maintenance or whatever?

Do you think a marketing consultant going from a downtown office to a business premises to spend the day giving a lecture in that business isn't going to claim mileage? If he has an office in his home is this different (has Revenue made a change in 2014?)

If you have an office at your home, actually do some work from home why is this different?

WallyWonka

If you check revenue's examples both those cases are covered, and they are not allowed.
Revenue have been getting criticism for their position in that it isn't up to date with modern working realities.
I have no doubt plenty of people do charge the mileage like you suggest, but I don't think it is correct.

I would love to be wrong though!

Avatar MIA

WallyWonka wrote: »

If you check revenue's examples both those cases are covered, and they are not allowed.
Revenue have been getting criticism for their position in that it isn't up to date with modern working realities.
I have no doubt plenty of people do charge the mileage like you suggest, but I don't think it is correct.

I would love to be wrong though!

Can you put up the revenue link?

Avatar MIA

I've read the IT51 from Revenue.

I think you're interpreting this wrong. The home they are talking about is an employee's home. Say, Dell has someone that works occasionally from home, but commutes into Dell HQ every now and then. He can't claim mileage for that.

Your client is not your employer. Your business is your employer. When you travel from your business to your client you should be able to claim mileage.

WallyWonka

On the Revenue page for IT51 (www. revenue.ie/en/tax/it/leaflets/it51.html) there is a link to Revenue’s Statement of Practice on the matter (www. revenue.ie/en/practitioner/law/statements-of-practice/sp_it_2_07.pdf). Reading that I think section 2.5 applies to my circumstances.

2.5 Employee working at a number of locations on a daily basis in the same employment
In some instances, an employee may work at a number of locations on a daily basis in the same employment.
Where an employee performs the duties of his/her employment at more than one location on a daily basis, the reimbursement of expenses of travel necessarily incurred in travelling between these separate locations may be made tax-free.
Example
John is employed and his duties involve working, firstly at Location A, then Location B and, lastly, at Location C on a daily basis. The reimbursement of expenses between –
Y Locations A and B; and Y Locations B & C
may be made free of tax. However, any reimbursement of expenses of travel between home and location A (the first location) and Location C (the last location) and home is taxable.

I am still employed by my own company and I am carrying out work at multiple client locations. I see your point, reading the above I think I should be allowed to claim the mileage. Just everywhere else I've looked I've only seen it said it's not allowed.

One question reading the above. On the days I only carry out work at a single client location, can I still claim? Reading the above I can't. I can only claim the journeys where I have billable hours at home directly before or after (depending on direction).

I will have to run this by my accountant, I'd like to get his thoughts before I claim anything.

Can this wait until January? Or do I have to submit the expense claim to my company before the end of the year?

Thank you! Random stranger on the internet. I actually think I can claim a good bit.

Avatar MIA

WallyWonka wrote: »

On the Revenue page for IT51 (www. revenue.ie/en/tax/it/leaflets/it51.html) there is a link to Revenue’s Statement of Practice on the matter (www. revenue.ie/en/practitioner/law/statements-of-practice/sp_it_2_07.pdf). Reading that I think section 2.5 applies to my circumstances.



I am still employed by my own company and I am carrying out work at multiple client locations. I see your point, reading the above I think I should be allowed to claim the mileage. Just everywhere else I've looked I've only seen it said it's not allowed.

One question reading the above. On the days I only carry out work at a single client location, can I still claim? Reading the above I can't. I can only claim the journeys where I have billable hours at home directly before or after (depending on direction).

I will have to run this by my accountant, I'd like to get his thoughts before I claim anything.

Can this wait until January? Or do I have to submit the expense claim to my company before the end of the year?

Thank you! Random stranger on the internet. I actually think I can claim a good bit.

Pheew. Yeah, I think the confusion is around who's your employer. It's your company, not the client.

The first A to B disallowed element again refers back to an an employee traveling to his place of work, such as the Dell employee example. It doesn't apply to you.

You can go back 4 years. Effectively 2011 if you get your claim in before the end of 2015 :-)

If your accountant says otherwise ask him to come on here

One other thing, paying 5% by two BIK doesn't seem right. Imagine you had 21 people on your van policy (unlikely, but not impossible) and each of them spent half an hour private trip in the year to the local shop to get their spouse a birthday card, the BIK would be 105% of the OMV which would be ridiculous.

Get clarification from revenue if required, but paying double sounds very excessive!

barneystinson

Avatar MIA wrote: »

Pheew. Yeah, I think the confusion is around who's your employer. It's your company, not the client.

The first A to B disallowed element again refers back to an an employee traveling to his place of work, such as the Dell employee example. It doesn't apply to you.

You can go back 4 years. Effectively 2011 if you get your claim in before the end of 2015 :-)

If your accountant says otherwise ask him to come on here

One other thing, paying 5% by two BIK doesn't seem right. Imagine you had 21 people on your van policy (unlikely, but not impossible) and each of them spent half an hour private trip in the year to the local shop to get their spouse a birthday card, the BIK would be 105% of the OMV which would be ridiculous.

Get clarification from revenue if required, but paying double sounds very excessive!

Avatar, you have heard of Revenue's National Contractors Project, right? I'd be very wary of definitively advising anyone about their entitlement to tax free money from their own company, given how much money it has cost a lot of people who were given incorrect advice...

OP, you should definitely clarify your entitlements, based on paid for professional advice, from someone whose professional indemnity insurance will have to pay the penalties if you end up with a big tax bill down the line.

Avatar MIA

barneystinson wrote: »

Avatar, you have heard of Revenue's National Contractors Project, right? I'd be very wary of definitively advising anyone about their entitlement to tax free money from their own company, given how much money it has cost a lot of people who were given incorrect advice...

OP, you should definitely clarify your entitlements, based on paid for professional advice, from someone whose professional indemnity insurance will have to pay the penalties if you end up with a big tax bill down the line.

Have you even read the thread?

1. The OP has an accountant.
2. He seems more anxious to be tax compliant than anyone I've ever come across.
3. Going by what he has said he does not seem to have issues regarding contractor/employee status. Don't confuse his getting confused about certain advice. He'd not be the first person.
4. He's been advised to get clarification from Revenue.

However, I've no concerns about being sued by the OP. Feel free to point out any possible errors in the advice given or avenues the OP could go down in suing me.

Finally,

5. Bah! Humbug!

barneystinson

Avatar MIA wrote: »

Have you even read the thread?

1. The OP has an accountant.
2. He seems more anxious to be tax compliant than anyone I've ever come across.
3. Going by what he has said he does not seem to have issues regarding contractor/employee status. Don't confuse his getting confused about certain advice. He'd not be the first person.
4. He's been advised to get clarification from Revenue.

However, I've no concerns about being sued by the OP. Feel free to point out any possible errors in the advice given or avenues the OP could go down in suing me.

Finally,

5. Bah! Humbug!

I'm not suggesting your advice is wrong, or that he could/should sue you. I'm simply saying he absolutely ought not try to rely on it, but bear it in mind when getting professional advice from someone he can sue Same as I'd tell him if it was my advice!