Dáil Éireann Debate, Tuesday - 28 June 2022
215. Deputy Seán Canney asked the Minister for Finance if his attention has been drawn to the inequity in the proposals to change the benefit-in-kind which will take account of the C02/kg impact of the vehicle for drivers of company cars given that they have no input into the type of car that their employer purchases or when their employer will change the fleet to electric vehicles; and if he will make a statement on the matter. [33675/22]
Amharc ar fhreagraThe BIK exemption forms part of a broader series of very generous measures to support the uptake of EVs, 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. 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. EVs will benefit from a preferential rate of BIK, ranging from 9 – 22% depending on mileage. Fossil-fuel 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. This will bring the taxation system around company cars into step with other CO2- based motor taxes as well as CO2-based vehicle BIK regimes in other member states
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 (EVs). However, in light of government commitments on climate change, Budget 2022 extended the preferential BIK treatment for EVs to end 2025 with a tapering mechanism on the vehicle value threshold.
