Benefit in Kind – Company Vehicles
As of January 1st of this year, new rules are now in effect that applies to benefit in kind on all company vehicles regardless of whether the car was made available to employees in previous years. The changes to benefit in kind on company cars, vans and electric vehicles are set out below:
BIK is chargeable on the excess amount (OMV – tax free amount) at the rates detailed above based on the C02 emissions and business mileage. If the tax free amount exceeds the OMV of the vehicle, no BIK charge will be payable.
Company Cars
From January 1st, 2023 onwards, the BIK cash equivalent on the use of a company car is determined based on the vehicle’s CO2 emissions as well as the business mileage undertaken in the year.The CO2 emissions category of the car is based on the following table:
Business mileage and CO2 emissions category:
Examples
For example, an employee with a company car that has an original market value (OMV) of €40,000, C02 emission levels of 180g/km (Category E) and business mileage for the year of 24,000km will be charged BIK of €15,000 for the year (€40,000*37.5%). Another car with an OMV of €40,000 with a CO2 emissions level of 59g/km (Category A) or less and business mileage of 24,000km will only be liable to BIK of €9,000 per year.Company Vans
Now, the benefit in kind for company vans will increase from 5% to 8% of the Original Market Value of the van.Electric Vehicles – Changes in BIK rules on the way!
The exemption from BIK charged on the private use of electric vehicles was introduced by the Finance Act 2017. Originally, it allowed for new and used electric cars to be fully exempted for BIK purposes for the 2018 tax year. In subsequent Finance Acts, the exemption has been limited to a maximum original market value (OMV) of €50,000. In cases where the vehicle has an OMV above €50,000, partial relief is granted.For years 2018 to 2022
OMV below €50,000 During the years 2018-2022, a full BIK exemption is available OMV Exceeding €50,000 There are 3 important date categories. The categories are assigned by when the vehicle was first made available to the employee:- Pre 10th October 2017
- Between 10th October 2017 and 9th October 2018
- Post 10th October 2018
BIK is chargeable on the excess amount (OMV – tax free amount) at the rates detailed above based on the C02 emissions and business mileage. If the tax free amount exceeds the OMV of the vehicle, no BIK charge will be payable.