Under the Taxsaver scheme (www.taxsaver.ie) employers in the Republic of Ireland can purchase tax free monthly or annual bus and rail tickets for employees and directors. This can cut the cost of these commuter tickets by up to 52% (51% in 2015) while employers can also save up to 10.75% in Employer PRSI.
The scheme covers the main metropolitan areas in the country: Dublin, Cork, Limerick, Galway and Waterford and the Western Rail Corridor between Galway and Limerick.
Example: Employer purchases annual ticket for €1,500. Employee pays for this by means of salary sacrifice. The term salary sacrifice is generally understood to mean an arrangement under which an employee agrees with the employer to take a cut in remuneration and in return the employer provides a benefit of a corresponding amount to the employee (in this case a bus/rail pass).The amount saved will depend on whether their highest rate of tax (PAYE) is 40% or 20%. The PRSI rate assumes the employee is on the most common PRSI Class A. (Many directors will be on PRSI Class S)
| Annual Salary | €40,000 |
| Less Annual Travel Ticket | -€1,500 |
| Taxable Salary | €38,500 |
| Nett Amount Paid by Employee (2015 Rates) | |
| PAYE @ 40%, PRSI @ 4%, USC @ 7% | €735 |
| PAYE @ 20%, PRSI @ 4%, USC @ 7% | €1,035 |
| Employer PRSI Saving @ 10.75% | €161.25 |
The bus or rail ticket can also be used as a alternative to a cash bonus or as an addition to salary so that the employee or director saves the PAYE, PRSI and USC on the value of the ticket and the employer saves the Employer PRSI.
The ticket must be purchased by the employer. An employee cannot purchase and claim the refund from the Revenue Commissioners. The ticket is non-transferable and can only be used by the named employee. There must be a genuine and enforceable alteration to the terms and conditions of employment (exercising a choice of benefit instead of salary).
For further information, please contact us at 091 778911 or via website contact page
Download our Free eBook
Save Money on Payroll
