Dáil Éireann Debate, Tuesday - 22 March 2022
267. Deputy Richard Bruton asked the Minister for Finance if he has decided on the BIK rules which will be applied to electric vehicles after the current exemption expires; if he will ensure that the lower environmental impact continues to be reflected in the BIK burden; and if he will make a statement on the matter. [14638/22]
Amharc ar fhreagraIn Finance Act 2021 I extended the BIK exemption to end 2025 with a tapering mechanism that represents a value for money consideration and serves to indicate the removal of the relief altogether in 2025. This extension is in support of Government policy to incentivise the transition to electric vehicles, while the lead in time allows for fleet planning.
In Finance Act 2019 I legislated for a CO2-based BIK regime for company cars from 1/1/2023. From that date the amount taxable as BIK remains determined by the car’s original market value (OMV) and the annual business kilometres driven, while new CO2 emissions-based bands will determine whether a standard, discounted, or surcharged rate is taxable. The number of mileage bands is reduced from five to four.
I believe that better value for money for the taxpayer is achieved by curtailing the amount of subsidies available and building an environmental rationale directly into the BIK regime. It was determined in this context that reforming the BIK system to include emissions bands provides for a more sustainable environmental rationale than the continuation of the current system with exemptions for electric vehicles. The BIK exemption was intended as a temporary measure and forms part of a broader series of very generous measures to support the uptake of electric vehicles, including a reduced rate of 7% VRT, a VRT relief of up to €5,000, low motor tax of €120 per annum, SEAI grants, discounted tolls fees, and 0% BIK on electric charging.
The onset of the new BIK regime on 1/1/2023 will see electric vehicles benefit from a preferential rate of BIK, ranging from 9 – 22% depending on mileage (as well as the tapered exemption until end 2025). Internal combustion engine (ICE) vehicles will be subject to higher BIK rates, up to 37.5%. This new structure with CO2-based discounts and surcharges will incentivise employers to provide employees with low-emission cars.
