Dáil Éireann Debate, Thursday - 8 September 2022
323. Deputy Fergus O'Dowd asked the Minister for Finance if he will respond to concerns raised by a company (details supplied) in respect of the possible implications of changes in benefit-in-kind (details supplied); and if he will make a statement on the matter. [42076/22]
Amharc ar fhreagra328. Deputy Paul Kehoe asked the Minister for Finance the reason a benefit-in-kind tax has been introduced on electric vehicles that are purchased by employers for their employees on the value over €36,000 and the original market price and on EVs that were purchased in previous years, which may act as a disincentive for people to switch to EVs; and if he will make a statement on the matter. [42246/22]
Amharc ar fhreagra363. Deputy Claire Kerrane asked the Minister for Finance the changes he is planning to introduce for benefit-in-kind on company cars which will be calculated with reference to CO2 emissions from January 2023 onwards; if he has examined the impact this will have on rural companies and employees where the range of electric vehicles cannot meet the distances some employees are required to travel on a daily basis; and if he will make a statement on the matter. [42714/22]
Amharc ar fhreagraI propose to take Questions Nos. 323, 328 and 363 together.
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.
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.
This BIK charging mechanism was legislated for in 2019 and was announced as part of Budget 2020. I am satisfied that this has provided a sufficient lead in time to adapt to this new system before its implementation in 2023.
