I extended the benefit-in-kind exemption for electric vehicles until 31 December 2021 to support policies to reduce carbon emissions in the transport sector. This forms part of a broader series of measures to support the uptake of electric vehicles, including VRT relief of up to €5,000, an SEAI grant of up to €5,000, very low motor tax of €120 per annum, 50% discount off tolls fees and 0% BIK on electric charging.
Having regard to value for money and tax equity considerations, a cap of €50,000 on this exemption is applied such that an electric vehicle with an original market value exceeding €50,000 will be subject to BIK on the amount in excess of €50,000. The cap will take effect from the 2019 tax year in respect of all electric vehicles made available to employees in 2019 with an original market value greater than €50,000.
In examining value for money and tax equity considerations, the quantum of tax expenditure provided annually to qualifying taxpayers in relation to the use of high end cars must be taken into account. To take the example of an electric vehicle with an original market value of, say, €150,000 that has been purchased by the employer for the use of a Director, where the employer has already benefitted from VRT relief and an SEAI grant. Without the imposition of a €50,000 cap, the tax expenditure on such a vehicle is the equivalent of an annual grant from the taxpayer to the employee or Director of up to €23,400, for a single tax year (i.e. the tax liability of the taxpayer would be reduced by up to this amount in a single tax year). This amount is equivalent to 7 or 8 home insulation grants to low income households under the SEAI Better Energy Warmer Homes Scheme, where the benefit of these grants will last for many years. Or, that the same amount, under the National Fuel Allowance Scheme, is equivalent to an allowance for about 37 low income households for one year.
I am encouraged by the fact that registrations of new electric vehicles has doubled in the year to September and am satisfied that the cap has been set at a reasonable level which maintains a strong incentive for the take-up of electric vehicles while having due regard for value for money and tax equity.