Tax Tip 18.02.13 Bus and Bikes to reduce tax for paye workers

One of the ways to reduce the amount of tax that you pay as a PAYE employee is to get your employer to give you a bus or train pass or to buy you a bike in lieu of income you are already receiving. Both of these are exempt from benefit in kind and therefore wlll not incur tax implications and if they are used to replace some of your existing salary then they will reduce your tax bill.
If you approach your employer and ask him can he pay you 500 euro (just an example) less a year through your wages and instead buy you 500 euro of bus passes or train passes then you will end up paying less tax. This is because the 500 bus pass is exempt from tax where as you would be paying tax on the 500 if just paid through your normal wages. See Schedule (1) below for who your employer can get the passes from in order to be eligible for the exemption. Your employer can then claim the cost of the pass as an expense and also saves money on the prsi relating to the amount which would have been paid as wages.
The government have implemented this exemption to encourage people to use public transport.
Potential Pitfalls: Your employer has to pay for the pass, you cant buy it and then pass the bill on to them.

You can also get your employer to buy you a bike and safety equipment up to 1000euro per year and this is also exempt. This is a really good scheme.
Of course these are only of benefit if you want to use public transport or ride a bike to work. But if you are on the high rate of tax and you get 1000 euros worth of income from bus passes then you are saving your self at least 410euro in tax



Schedule (1)
 The bus or train pass must be issued by either:
•
CIE or any of its subsidiaries (e.g. Bus Eireann, Iarnrod Eireann, Bus Atha Cliath); or
•
A private bus operator holding a passenger licence under Section 7 of the Road Transport Act 1932; or
•
A person who provides a passenger transport service under an arrangement entered into by CIE in accordance with Section 13(1) of the Transport Act 1950.
•
A person who has entered into an arrangement with the Railway Procurement Agency, in accordance with section 43(6) of the Transport (Railway Infrastructure) Act 2001 to operate a light railway or metro
•
A person who provides a ferry service within the state, operating a vessel which holds a current valid –
(i)
passenger ship safety certificate,
(ii)
passenger boat licence, or
(iii)
high-speed craft safety certificate,
issued by the Minister for Communications, Marine and Natural Resources.

If you have any queries contact Frank McGivney & Co. Ltd Chartered Management accountants, fmcgivney@live.com 0469293891