Changes to Benefit in Kind on Company Vehicles from 1 January 2023.

 

As part of the government’s climate action plan to lower emissions, changes have been introduced to the rules for calculating BIK on motor. The new rules apply to all motor vehicles (including electric vehicles) whether the vehicle is acquired in 2023 or in previous years.

Changes to BIK on Company Cars

The BIK on company cars is currently based on the OMV (original market value) of the car and the mileage.

With effect from 1 January 1 2023 BIK on company cars will be determined by the business mileage undertaken and the vehicle’s CO2 emissions.

Changes to Benefit in Kind (BIK) on Electric Vehicles

The Benefit In Kind (BIK) regime is also changing for electric Vehicles. Under the current rules if the electric vehicle’s OMV (Original market value) does not exceed €50,000, then no BIK arises. Where the electric vehicle costs more than this, the OMV is reduced by €50,000 to calculate the BIK.

With effect from 1 January 2023, this will be changed for an electric vehicle made available for an employee’s private use during the years 2023-2025. The OMV of the vehicle is reduced by €35,000 in 2023, €20,000 in 2024 and €10,000 in 2025. These reductions will apply irrespective of the actual OMV or when the vehicle was first provided by the employee.

Changes to Benefit in Kind (BIK) on Company Vans

For the tax year 2023 and onwards, the BIK on vans will increase from 5% to 8% of the original market value.

Action Required

Employers who provide cars or vans to their employees will need to review the treatment of these benefits in advance of the first pay dates in 2023. Staff should be notified of these changes.