At the beginning of 2023 the BIK system moved to a CO2 based system to encourage the use of lower emission cars and electric vehicles in order to help incentivise a move to cleaner and less polluting. However, since this new benefit came into effect, businesses with company cars and vans experienced an increase in their income tax liabilities. The changes hit a large number of the estimated 150,000 drivers of company vehicles.

On the 7th of March 2023, the Government announced temporary changes to the Benefit In Kind (BIK) calculations for company vehicles. The Government said that in the Finance Bill 2023, it will temporarily introduce a relief of €10,000 on the Original Market Value (OMV) of some vehicles, upon which the tax is calculated.

Company Cars 2023:

The Original Market Value (OMV) of cars in Category A, B,C and D, will be reduced by €10,000 which will consequently reduce the BIK charge. This reduction is not applicable to cars in Category E. The table below shows amount of miles travelled and CO2 emission category (new temporary changes)

Company Vans and Electric Vehicles 2023:

This benefit will also apply to all vans and electric vehicles. For electric vehicles, the OMV deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for EVs, meaning that the total relief for 2023 will be €45,000. The cash equivalent for vans will be calculated as 8% of the OMV, with a €10,000 reduction in the OMV.

Payroll:

Businesses may need to capture these changes to the BIK on company vehicles in the next payroll submission. Since these changes are effective from the beginning of January 2023, your company may need to make an adjustment to BIK for company provided vehicles in the next payroll submission to capture any excess BIK applied from 1 January 2023, any tax refund due should filter through the payroll function.

Get in Touch:

If you have any doubts about the Benefit In Kind (BIK) calculations, please click here to book a no obligation call today.